A test of the interruption of foreign borrowing on a target small open economy

GHADA GOMAA A. MOHAMED, CARLETON UNIVERSITY, CANADA
Abstract: This paper examines a simple open economy version of both the Solow and the Ramsey growth models. In addition, it undertakes a linear intervention analysis to examine the effect of the financial embargo on the time path of the economic growth rate of South Africa. Based on both the theoretical and the empirical models, the writer concludes that the financial embargo of 1986-1991 on South Africa had only a temporary negative effect on the time path of the economic growth rate of the country.
Keywords: International economic growth; exogenous growth models; economic sanctions; South Africa.