Abstract:
The purpose of this study was to investigate growth through innovation and
productivity in the South African economy. The study employed the Autoregressive
Distributed Lag (ARDL) approach to analyse the annual time series data from the
period 1994 to 2018. The data of the study is quantitative and was collected from the
South African Reserve Bank and the World Bank. Due to a decline in investment in
innovation in South Africa as compared to Brazil, Russia, India and China, the study
recommends increased investment in innovation, which may yield positive results on
economic growth given the Fourth Industrial Revolution (4IR) presence. The results of
the study indicate that there is a long-run relationship between the variables
furthermore, in the short-run research and development (R&D), several patents and
manufacturing: Labour productivity has a positive and is statistically significant on
GDP. However, labour productivity in the non-agricultural sector is positive but
statistically insignificant on GDP. Moreover, the findings, in the long run, reveal that
R&D, number of patents, and manufacturing: labour productivity is positive and
statistically significant on the economic growth in South Africa while labour productivity
in the non-agricultural sector has a negative impact on economic growth. This study
recommends that policymakers should aim at increasing government-funded R&D,
education and human capital to induce productivity and eventually drive up economic
growth in South Africa.
