A Policy Approach towards Achieving Regional Economic Resilience in Developing Countries: Evidence from the SADC

• Published in: Sustainability 2021-03, Vol.13 (5), p.2674
• Main Authors: Pretorius, Ockert, Drewes, Ernst, van Aswegen, Mariske, Malan, Gerard
• Format: Article
• Language: English
• Subjects: Adaptability; Capital; Consumption; Developing countries; Econometrics; Economic conditions; Economic development; Economic growth; Exports; Financial services; Impact analysis; Industrial development; International trade; LDCs; Literature reviews; Planning; Productivity; Regional development; Regions; Resilience; Social structure; Tariffs
• ISSN: 2071-1050; 2071-1050
• DOI: 10.3390/su13052674

External economic shocks such as the global financial crisis (GFC) affect regional economic growth in developing regions through impacting export demand and capital inflows. Resilience to these economic shocks—i.e., the ability to recover from the initial impact and prolonged effects of said shocks—is influenced by the inherent vulnerability of regional economies to their impact. The research objective is to investigate regional economic resilience policy in the context of the Southern African Development Community (SADC), and the wider perspective of trading blocs among developing countries. Central hereto is undertaking an equilibrium and econometric analysis to identify endogenous and exogenous factors of the regional economy that influence economic resilience. Analysis findings indicate that economic openness, export market dynamics and sectoral composition may influence economic resilience. SADC vulnerability may be attributed to the dependence on foreign direct investment (FDI) inflows and exports to higher-income markets, relatively low import tariffs and the comparative importance of tertiary activities to output. A balanced regional policy approach is required: one focused on industrialization, while incorporating elements to support economic resilience. The latter includes increased intra-regional trade anchored in the development of regional supply and value chains which support primary sector activities, and capacitated supranational institutions to oversee regional integration initiatives.