Sustaining Economic Growth in COMESA: Challenges and Prospects

AbstractThe Common Market for Eastern and Southern Africa (COMESA) achieved an average growth rate of 5.1% between 2005 and 2014. However, economic growth in the region plunged from 6.5% recorded in 2014 down to 6.0% in 2015 and reduced drastically to 3.5% in 2016. This study employs the generalized two‐stage least square instrumental variables regression to examine growth catalysts and the challenges and prospects of sustaining economic growth. The empirical results suggest that external resources significantly promote economic growth and pose a significant threat to growth sustainability, given the uncertainty and globally declining trend in external resource inflows to Africa. Furthermore, the domestic savings rate was found to contribute significantly to economic growth, indicating that the sustainability of economic growth will require a deliberate effort to mobilize domestic resources. Finally, the study established that, while participation in the COMESA trading bloc by member‐countries does not significantly impact the region, the joint participation of some COMESA members in both COMESA and Southern African Development Community (SADC) trading blocs has a detrimental effect on economic growth in the region.