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Abstract: This study examined the macroeconomic
determinants of economic growth in Zambia over the period 1990-2024 using an
autoregressive distributed lag-error correction model (ARDL-ECM). Annual
secondary data were drawn from the World Development Indicators for Gross
Domestic Product (GDP), inflation, the real effective exchange rate, government
expenditure, the real interest rate, and unemployment. Augmented Dickey-Fuller
tests showed that all variables were integrated of order one, which justified
the ARDL bounds-testing approach. The Schwarz Information Criterion selected an
ARDL(1,0,2,0,2,1) specification, and the bounds test confirmed cointegration (F
= 5.6746). The long-run estimates showed that the real effective exchange rate
(b = 3.4725, p = 0.0011) and government expenditure (b = 0.0847, p = .0336)
were positive and statistically significant determinants of GDP, whereas inflation,
the real interest rate, and unemployment were not statistically significant in
the long run. In the short run, changes in the real effective exchange rate,
lagged changes in government expenditure, and current changes in unemployment
significantly affected GDP. The error-correction term was negative and
statistically significant (b = -0.1860, p < 0.001), implying that about
18.6% of short-run disequilibrium was corrected each year. Diagnostic tests
indicated no serial correlation, no heteroskedasticity, normally distributed
residuals, and correct functional form. The findings suggest that Zambia's
growth path has been shaped primarily by exchange-rate conditions and the
quality and persistence of fiscal activity, while labour-market disruptions
matter more in the short run than in the long run. The article recommends
exchange-rate stabilisation, more productive public spending, improved fiscal
efficiency, and growth strategies that support employment creation. DOI: https://doi.org/10.51505/IJEBMR.2026.10613 |
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