This paper examines the trade relationship between Australia and South Africa to assess if it is justifiable to establish a FTA between these two countries. The paper uses the cointegration analysis to examine the long-term trade relationship between these two countries. The results suggest that Australian-South African trade has unique features which indicate that its growth is not just a reflection of overall world trade. The paper also uses a simultaneous equations model to test if there are significant feedback effects in Australian trade with South Africa. The results suggest that intensification of the trade relationship would be beneficial to both countries.
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