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Folia Oeconomica Stetinensia

The Journal of University of Szczecin

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Analysis of the Keynesian Theory of Employment and Sectoral Job Creation: The Case of the South African Manufacturing Sector

Thomas Habanabakize / Paul-Francois Muzindutsi
  • Ph.D., Senior Lecturer School of Accounting, Economics and Finance University of KwaZulu-Natal University Road Westville Private Bag X 5400, Durban 4000, South Africa
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Published Online: 2018-07-04 | DOI: https://doi.org/10.2478/foli-2018-0010


The manufacturing sector is one of the backbones of the South African economy, and yet is one of the economic sectors facing challenges in job creation. This study analysed the long-run and short-run effects of aggregate expenditure components on job creation in the South African manufacturing sector. A Vector Autoregressive (VAR) with Johansen co-integration approach was used to analyse quarterly data from 1994 to 2015. The findings are that there is a long-run relationship between aggregate expenditure and job creation in the South African manufacturing sector, with government and investment spending being the major components of aggregate expenditure that create jobs in the South African manufacturing sector. Conversely, consumption spending destroys jobs in the manufacturing sector, while net exports have no significant effect on job creation. The short-run relationship between variables was not significant. Recommendations are that more effort should be put into investment spending, and government should spend more on investment than on consumption spending - in order to increase job creation in the manufacturing sector.

Keywords : Keynesian model; job creation; unemployment; manufacturing sector; South Africa


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About the article

Received: 2017-09-25

Accepted: 2018-03-27

Published Online: 2018-07-04

Published in Print: 2018-06-01

Citation Information: Folia Oeconomica Stetinensia, Volume 18, Issue 1, Pages 123–143, ISSN (Online) 1898-0198, DOI: https://doi.org/10.2478/foli-2018-0010.

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© 2018 Thomas Habanabakize, published by Sciendo. This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License. BY-NC-ND 4.0

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