EFFECT OF TRADE OPENNESS ON ECONOMIC GROWTH IN SUB-SAHARAN AFRICA: DYNAMIC PANEL ANALYSIS

Sub Saharan Africa ◽

Allocation Of Resources ◽

African Countries ◽

Regional Trade ◽

Explanatory Variables ◽

Theoretically, proponents of traditional trade theories argue that trade openness can enhance economic growth by providing access to goods and services, achieving efficiency in allocation of resources through comparative advantage, creation of employment opportunities and generation of capital that leads to better living standards in terms of higher level of GDP per capita,trade openness may strengthen economic growth through different channels such as efficient allocation of resources. However, owing to the fact that there are limited studies on trade openness, various studies indicate divergent views on the effect of trade openness on economic growth. For this reason, it is not clear whether or not trade openness affect economic growth in Sub-Saharan Africa. The main objective of this study was to investigate the effect of trade openness on economic growth in Sub-Saharan Africa. Control variables used in the regression included oversees development assistance, population growth rate, domestic credit and foreign direct investment. Trade openness, inflation and capital stock were explanatory variables and economic growth the dependent variable. This study was modeled using the Neoclassical Growth theory. One- step difference Generalized Method of Moments results revealed that trade openness had a positive and significant effect on economic growth, capital stock positive and insignificant relationship, while inflation had positive and insignificant relationship with economic growth in SSA.The study thus recommends that there is a need for improving balance of trade by increasing exports diversification and balanced growth and the policy makers of SSA countries should have to give a priority for trade and investment policies which requires some reforms to adjust with changing economic environment. The study concluded that extra-regional trade spurs higher output than intra-regional trade. This may be due to lack of efficiency in the implementation of trade agreements among the intra-regional constituent countries such as Sub-Saharan African countries and lack of full commitment by the member states governments to trade more intensively. KEYWORDS: Trade openness, economic growth, Sub-Saharan Africa

THE EFFECT OF HUMAN CAPITAL ON ECONOMIC GROWTH IN SOME SUB SAHARA AFRICAN COUNTRIES (SSA)

American Journal of Economics ◽

10.47672/aje.884 ◽

2021 ◽

Vol 5 (1) ◽

pp. 1-24

Author(s):

AISHA AHMAD SAJOH

Keyword(s):

Economic Growth ◽

Human Capital ◽

Data Base ◽

Sub Saharan Africa ◽

Unique Contribution ◽

African Countries ◽

Sub Saharan ◽

Table Data ◽

The Impact

Purpose: This research looked into debate on the possible impact of human capital on economic growth in Sub-Saharan Africa (SSA) and considers two alternative measures of human capital: health and education. Methodology: The research used a dynamic model based on the system generalized method of moments (SGMM) and analysed a balanced panel data covering 35 countries from 1986–2018. The research used Microsoft excel to record all the data gotten from the world indicator data base from world bank, penn world table data base and CANA database. The analysis was presented in a tabular form. Findings: This study found that human capital has an overall positive and statistically significant impact on economic growth in the SSA region, although, democracy has a negative and statistically significant impact on economic growth in the region. This finding shows the importance of both measures of human capital and aligns with the argument in the literature that neither education nor health is a perfect substitute for the other as a measure of human capital. Unique contribution to theory, practice and policy:Generally, the finding emphasised that both education and health measures of human capital are important, and that policymakers must consider the level of economic development while formulating policies that can enhance the impact of human capital on economic growth in the Sub-Saharan Africa region.

Trade openness, institutions and economic growth in Sub-Saharan Africa

Jurnal Perspektif Pembiayaan dan Pembangunan Daerah ◽

10.22437/ppd.v8i6.10653 ◽

2021 ◽

Vol 8 (6) ◽

pp. 541-560

Author(s):

Taiwo AKINLO ◽

Charles Olalekan OKUNLOLA

Keyword(s):

Economic Growth ◽

Interactive Effect ◽

Trade Openness ◽

Institutional Quality ◽

Sub Saharan Africa ◽

Law And Order ◽

African Countries ◽

Nonlinear Growth ◽

Government Stability ◽

This research investigates the interactive effect of trade openness and the institutional quality on economic growth in sub-Sahara Africa. The sample consists of 38 sub-Saharan African countries and covers the period 1986-2015. Pooled OLS, fixed effect, and Dynamic GMM were used as estimation techniques. The empirical section used a nonlinear growth regression specification that interacts trade openness with law and order, bureaucratic quality, corruption, government stability, and democratic accountability. The study found that corruption, government stability, law and order, and bureaucratic quality as institutional quality variables harm economic growth. The interaction of trade openness and institutional quality variables positively impacted economic growth. It is an indication that trade openness better impacted economic growth in the presence of high-quality institutional variables.

Healthcare Expenditure and Economic Growth in Sub-Saharan Africa

Asian Journal of Economics Business and Accounting ◽

10.9734/ajeba/2019/v13i230170 ◽

2020 ◽

pp. 1-7

Author(s):

Birhanu Yimer Ali ◽

Robert Moracha Ogeto

Keyword(s):

Economic Growth ◽

Foreign Direct Investment ◽

Direct Investment ◽

Health Expenditure ◽

Health Sector ◽

Sub Saharan Africa ◽

Domestic Saving ◽

African Countries ◽

This paper investigated the effect of health expenditure on economic growth in Sub Saharan Africa. The linear dynamic generalized method of moments instrumental variable (GMM-IV) was used on a panel data of 38 Sub-Saharan African countries over the period 2000-2016. Findings reveal that health expenditure significantly improves economic growth in Sub Saharan Africa. The separate effects of Public and private health expenditures have also shown a significant positive relationship on economic growth. In addition to health expenditure, other determinants like gross domestic saving, foreign direct investment, and labor force brought a statistically significant improvement on economic growth, whereas official development assistance has a statistically insignificant effect on economic growth. This study concluded that health expenditure is an important element in attaining improved economic growth in Sub-Saharan African Countries as it assured a healthy workforce and the country’s populace. Therefore, increasing the amount of health expenditure allocated to the health sector yields a better economy. More on, revising policies to improve gross domestic savings and foreign direct investment also assure a better economic growth.

Linkage between alcohol consumption and economic growth in sub-Saharan Africa: Linear effect, threshold effect, or both?

10.53365/nrfhh/142585 ◽

2021 ◽

Author(s):

Rodrigue Tchoffo ◽

Guivis Nkemgha

Keyword(s):

Economic Growth ◽

Alcohol Consumption ◽

Empirical Evidence ◽

Threshold Effect ◽

Sustainable Growth ◽

Sub Saharan Africa ◽

African Countries ◽

Linear Effect ◽

This paper contributes to the literature on the relationship between alcohol consumption and economic growth. Despite growing attention on the topic, existing studies have demonstrated the existence of a threshold beyond which alcohol consumption leads to disease, negatively influences professions such as driving and leads to death. However, the threshold literature has not yet explored the nonlinear relationship between alcohol consumption and economic growth. The per capita alcohol consumption expenditure is used to capture the alcohol variable. The empirical evidence is based on the Pooled Mean Group (PMG) and System Generalized Method of Moments (GMM) with a 32 sub-Saharan African countries dataset over the period 2000-2016. The empirical evidence indicates that alcohol consumption fosters economic growth in sub-Saharan African countries. Moreover, the results show that an alcohol consumption threshold exists below which greater alcohol consumption has beneficial effects on economic growth and above which the alcohol consumption has a perverse effect on economic growth. This result materializes the existence of an inverted U-shape (Laffer Curve of alcohol). Therefore, Sub-Saharan African countries must control the level of alcohol consumption of their citizens in order not only to protect them against alcohol diseases but also to ensure sustainable growth.

Managing African Urbanization in the Context of Environmental Change

INTERdisciplina ◽

10.22201/ceiich.24485705e.2014.2.46528 ◽

2014 ◽

Vol 2 (2) ◽

Cited By ~ 13

Author(s):

Shuaib Lwasa

Keyword(s):

Climate Change ◽

Economic Growth ◽

Social Services ◽

Urban Areas ◽

Urban Governance ◽

Sub Saharan Africa ◽

African Countries ◽

Sub Saharan ◽

Urbanization Rate ◽

Development And Management

Africa’s urbanization rate has increased steadily over the past three decades and is reported to be faster than in any other region in the world . It is estimated that by 2030, over half of the African population will be living in urban areas . But the nature of Africa’s urbanization and subsequent form of cities is yet to be critically analyzed in the context of city authorities’ readiness to address the challenges . Evidence is also suggesting that urbanization in African countries is increasingly associated with the high economic growth that has been observed in the last two decades . Both underlying and proximate drivers are responsible for the urbanization, and these include population dynamics, economic growth, legislative designation, increasing densities in rural centers, as well as the growth of mega cities such as Lagos, Cairo and Kinshasa, that are extending to form urban corridors . With the opportunities of urbanization in Sub–Saharan Africa, there are also challenges in the development and management of these cities . Those challenges include provision of social services, sustainable economic development, housing development, urban governance, spatial development guidance and environmental management, climate change adaptation, mitigation and disaster risk reduction . The challenge involves dealing with the development and infrastructure deficit, in addition to required adaption to and mitigation of climate change . This paper examines the current state of urban management in Africa .

Financial Inclusion, Income Inequality and Sustainable Economic Growth in Sub-Saharan African Countries

Sustainability ◽

10.3390/su13041780 ◽

2021 ◽

Vol 13 (4) ◽

pp. 1780

Author(s):

Chima M. Menyelim ◽

Abiola A. Babajide ◽

Alexander E. Omankhanlen ◽

Benjamin I. Ehikioya

Keyword(s):

Economic Growth ◽

Income Inequality ◽

Financial Services ◽

Sub Saharan Africa ◽

Kuznets Curve ◽

African Countries ◽

Financial Access ◽

Sub Saharan ◽

Sustainable Economic Growth ◽

The Impact

This study evaluates the relevance of inclusive financial access in moderating the effect of income inequality on economic growth in 48 countries in Sub-Saharan Africa (SSA) for the period 1995 to 2017. The findings using the Generalised Method of Moments (sys-GMM) technique show that inclusive financial access contributes to reducing inequality in the short run, contrary to the Kuznets curve. The result reveals a negative effect of financial access on the relationship between income inequality and economic growth. There is a positive net effect of inclusive financial access in moderating the impact of income inequality on economic growth. Given the need to achieve the Sustainable Development Targets in the sub-region, policymakers and other stakeholders of the economy must design policies and programmes that would enhance access to financial services as an essential mechanism to reduce income disparity and enhance sustainable economic growth.

Foreign Direct Investment - Growth Linkage in Sub-Saharan Africa: Is Governance a Mediating Factor?

International Journal of Business Economics and Management ◽

10.18488/journal.62.2019.62.111.129 ◽

2019 ◽

Vol 6 (2) ◽

pp. 111-129

Author(s):

Fisayo Fagbemi ◽

Kehinde Mary Bello

Keyword(s):

Economic Growth ◽

Fixed Effects ◽

Political Stability ◽

Business Environment ◽

Mediating Effect ◽

Sub Saharan Africa ◽

Policy Framework ◽

Investment Efficiency ◽

African Countries ◽

In sub – Saharan Africa, weak institutions and the rising concern for improved business environment offer considerable leverage for enhancing the effectiveness of institutional framework, capital inflows, and public investment efficiency. These have put SSA in the global spotlight in recent times. Hence, the study examines the mediating effect of governance on FDI – growth nexus in 35 SSA countries between 2002 and 2017 using panel data techniques (Pooled OLS, Fixed Effects, and Panel-Corrected Standard Error’ (PCSE) estimation) and the Dynamic One – Step Difference and System GMM. Results indicate that control of corruption, political stability and regulatory quality, including governance composite index, have a positive and significant effect on economic growth, suggesting that institutions have a salutary impact on SSA economies. The findings further show that FDI inflows adversely influence growth owing to insufficient absorptive capacity that could enhance FDI effectiveness in the region. More importantly, the pervasiveness of poor governance in SSA is identified as a critical case that undermines the development of the nexus between FDI and economic growth. Thus, the study suggests that FDI – growth linkage would be enhanced by promoting a strong institutional environment that offers a good mechanism for attaining the actual FDI spillover potential through a policy framework that points the path towards cost-effective measures in SSA. Also, there should be core investment policies across African countries that would induce the private sector in consolidating government efforts and resources aimed at improving international competitiveness by diversifying the region’s economies away from a protracted commodity – based.

Long-Run and Short-Run Effects of Trade Openness on Life Quality in Sub-Saharan Africa

Asian Journal of Empirical Research ◽

10.18488/journal.1007.2021.118.72.83 ◽

2021 ◽

Vol 11 (8) ◽

pp. 72-83

Author(s):

Guivis Zeufack Nkemgha ◽

Aimée Viviane Mbita ◽

Symphorin Engone Mve ◽

Rodrigue Tchoffo

Keyword(s):

Trade Openness ◽

Life Quality ◽

Sub Saharan Africa ◽

African Countries ◽

Pooled Mean Group ◽

Long Run ◽

Short Run ◽

French Colonies ◽

Sub Saharan ◽

British Colonies

This paper contributes to the understanding of the other neglected effects of trade openness by analysing how it affects life quality in sub-Saharan African countries over the period 2000–2016. We used two trade openness indicators, namely: Squalli and Wilson index and the rate of trade. The empirical evidence is based on a pooled mean group approach. With two panels differentiated by their colonial origin, the following findings are established: the trade openness variable measured by Squalli and Wilson index has no effect on life quality in the both groups of countries in the short-run. However, it has a positive and significant effect on life quality in the both group of countries in the long-run. The use of the rate of trade confirms the results in the both groups of countries in the long-run. The contribution of trade openness to life quality is 3.27 and 5.19 times higher in the Former British Colonies than that recorded in the Former French Colonies of SSA respectively to the use of Squalli and Wilson index and the rate of trade. Overall, we find strong evidence supporting the view that trade openness promotes life quality in SSA countries in the long run.

The Nexus between Financial Development and Economic Growth: Panel Data Evidence from Developing Countries

Journal of Risk and Financial Management ◽

10.3390/jrfm14100489 ◽

2021 ◽

Vol 14 (10) ◽

pp. 489

Author(s):

E. M. Ekanayake ◽

Ranjini Thaver

Keyword(s):

Economic Growth ◽

Developing Countries ◽

Panel Data ◽

Least Squares ◽

Financial Development ◽

Panel Cointegration ◽

Sub Saharan Africa ◽

Explanatory Variables ◽

Cointegration Tests ◽

The objective of this study is to investigate the nexus between financial development (FD) in economic growth (GROWTH) in developing countries. The study uses panel data from 138 developing countries during the period 1980–2018. The relationship between financial development and economic growth is investigated using four explanatory variables that are commonly used to measure the level of financial development and several other control variables, including a dummy variable representing the financial and banking crises. The sample of 138 developing countries is also classified into six geographic regions. We have carried out panel unit-root tests and panel cointegration tests before estimating the specified models using both Panel Least Squares (Panel LS) and Panel Fully Modified Least Squares (FMOLS) methods. In addition, panel Granger causality tests have been conducted to identify the direction of causality between FD and GROWTH for each of the regions. The results of the study provide evidence of a direct relationship between FD and GROWTH in developing countries. Furthermore, there is evidence of bi-directional causality running from FD to GROWTH and from GROWTH to FD in samples of Europe and Central Asia, South Asia, and all countries, but not in East Asia and Pacific, Latin America and the Caribbean, Middle East and North Africa, and Sub-Saharan Africa.

Effect of Infrastructure and Foreign Direct Investment on Economic Growth in Sub-Saharan Africa

Global Journal of Emerging Market Economies ◽

10.1177/0974910119887242 ◽

2019 ◽

Vol 11 (3) ◽

pp. 183-201 ◽

Cited By ~ 1

Author(s):

Edward Nketiah-Amponsah ◽

Bernard Sarpong

Keyword(s):

Economic Growth ◽

Foreign Direct Investment ◽

Direct Investment ◽

Multinational Enterprises ◽

Business Environment ◽

Transport Infrastructure ◽

Sub Saharan Africa ◽

Economic Infrastructure ◽

This article investigates the effect of infrastructure and foreign direct investment (FDI) on economic growth in Sub-Saharan Africa (SSA) using panel data on 46 countries covering the period 2003–2017. The data were analyzed using fixed effects, random effects, and system generalized method of moments (GMM) estimation techniques. Based on the system GMM estimates, the results indicate that a 1 percent improvement in electricity and transport infrastructure induces growth by 0.09 percent and 0.06 percent, respectively. Additionally, FDI proved to be growth enhancing only when interacted with infrastructure. The interactive effect of FDI and infrastructure improves economic growth by 0.016 percent. The results suggest that public provision of economic infrastructure reduces the cost of production for multinational enterprises, thus providing an incentive to increase investment in the domestic economy to sustain economic growth. The results also suggest that the impact of FDI on economic growth is maximized when some level of economic infrastructure is available. Our findings thus provide ample justification on the need for a significant government investment in infrastructure to provide a less costly business environment for both local and multinational enterprises to improve economic growth.