Examining the role of economic growth on poverty reduction and income inequality in South Africa
Evidence from linear and nonlinear approach
DOI:
https://doi.org/10.20525/ijrbs.v14i6.4088Keywords:
Poverty, Income Inequality, Economic Growth, Electricity Consumption, South AfricaAbstract
Since the conclusion of apartheid in 1994, South Africa has witnessed notable economic growth; however, poverty and income inequality continue to be widespread issues. Despite economic growth, poverty and income inequality remain prevalent, with millions of South Africans living below the poverty line and encountering substantial obstacles to economic opportunities. This research examines the connections among economic growth, poverty alleviation, and income inequality in South Africa, utilising data from 1993 to 2023. This study employs various econometric models, specifically Vector Error Correction (VECM), Autoregressive Distributed Lag (ARDL), and Generalised Method of Moments (GMM), to examine the relationships among economic growth, poverty reduction, and income inequality in South Africa. The findings indicate that economic growth has a positive effect on poverty reduction, while simultaneously exerting a negative influence on income inequality. The research indicates that employment and access to electricity are essential determinants in alleviating poverty and income inequality. This study recommends that policymakers prioritise investments in education, job training, and infrastructure development, especially in rural areas, to foster inclusive economic growth and mitigate poverty and income inequality. Policymakers should enact measures to enhance electricity access and foster employment opportunities within the formal sector.
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