ECONOMIC GROWTH EFFECTS OF THE INTERACTION OF TRADE OPENNESS AND INSTITUTIONS QUALITY: EMPIRICAL EVIDENCE FROM SUB-SAHARAN AFRICA

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.

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Trade Openness and Economic Growth: Panel Data Evidence from Sub-Saharan Africa

Economica ◽

10.1111/ecca.12160 ◽

2015 ◽

Vol 82 ◽

pp. 1302-1323 ◽

Cited By ~ 18

Author(s):

Markus Brueckner ◽

Daniel Lederman

Keyword(s):

Economic Growth ◽

Panel Data ◽

Trade Openness ◽

Sub Saharan Africa ◽

Sub Saharan

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

EPRA International Journal of Economics, Business and Management Studies ◽

10.36713/epra6388 ◽

2021 ◽

pp. 23-35

Author(s):

Wycliffe Mugun

Keyword(s):

Economic Growth ◽

Capital Stock ◽

Trade Openness ◽

Generalized Method Of Moments ◽

Sub Saharan Africa ◽

Allocation Of Resources ◽

African Countries ◽

Regional Trade ◽

Explanatory Variables ◽

Sub Saharan

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

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DO FOREIGN FINANCIAL INFLOWS IMPACT ON ECONOMIC GROWTH? EVIDENCE FROM SUB-SAHARAN AFRICA

Studies of Applied Economics ◽

10.25115/eea.v38i2.3293 ◽

2020 ◽

Vol 38 (2) ◽

Author(s):

Daniel Kwabena Twerefou ◽

Festus Ebo Turkson ◽

Belinda Frimpong-Wiafe ◽

Samuel Antwi Darkwah

Keyword(s):

Economic Growth ◽

Foreign Direct Investment ◽

Direct Investment ◽

Trade Openness ◽

Development Assistance ◽

Government Expenditure ◽

Official Development Assistance ◽

Sub Saharan Africa ◽

Domestic Investment ◽

Sub Saharan

The study examines the impact of financial inflows, proxied by Foreign Direct Investment, Official Development Assistance and remittances on Economics growth in Sub-Saharan Africa using the Generalized Method of Moments technique and panel data for 47 Sub Saharan African countries for the period 1995-2017, while controlling for domestic investment, human capital, government expenditure, trade openness, inflation, financial development, political rights and civil liberty. The results indicate that remittances and Foreign Direct Investment are growth-enhancing as they impact positively on economic growth consistent with Solow neoclassical model. However, Official Development Assistance reduces economic growth possibly as a result of weak institutional quality. While government expenditure, domestic investment and inflation positively impact on Economics growth, trade openness and Secondary School Enrolment had a negative impact on growth. We recommend countries in the sub-region to come up with policies that encourage Foreign Direct Investment and remittances inflow while ensuring that institutional structures are improved to ensure the efficiency of Official Development Assistance and the better allocation of such resources. Countries also need to focus more on internal sources of finance for government expenditure.

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Sustaining Economic Growth in Sub-Saharan Africa: Do FDI Inflows and External Debt Count?

Journal of Risk and Financial Management ◽

10.3390/jrfm14040146 ◽

2021 ◽

Vol 14 (4) ◽

pp. 146

Author(s):

Udi Joshua ◽

David Babatunde ◽

Samuel Asumadu Sarkodie

Keyword(s):

Economic Growth ◽

Economic Development ◽

Trade Openness ◽

External Debt ◽

Sub Saharan Africa ◽

Economic Expansion ◽

Fdi Inflows ◽

Distributed Lag ◽

Sub Saharan ◽

The Impact

The quest for the attainment of economic development is sought after by all global economies, which by effect is expected to transcend to improving livelihoods and standard of living. However, several factors hinder the process of achieving sustained economic development, especially in developing countries. In this regard, assessing the extent of economic expansion orchestrated by foreign direct investment (FDI) inflows in vulnerable economies such as Sub-Saharan Africa (SSA), particularly in the face of the significant fall in global FDI inflow, is worthwhile. In essence, this study ascertains the impact of FDI inflows and external debt on economic growth amidst decline in FDI inflows and excessive foreign borrowings. The mixed order of integration from the stationarity test underpins the adoption of autoregressive distributed lag (ARDL) approach for data covering the period 1990 to 2018. The empirical results found FDI inflows play a crucial role in achieving economic expansion in the region. On average, FDI inflows, external debt, and foreign aids are more useful in expanding the economy compared to trade openness and exchange rate. Thus, this study recommends the need for SSA to open its economic borders for external capital, viz. FDI. A peaceful economic and political environment is a pre-condition to attract and maintain potential foreign investors. Stability in exchange rates is critical in achieving growth in FDI and other foreign resources. However, caution is required, especially in administration of external resources. Particularly, contracting external debt must strictly be driven by economic reasons rather than political motivation. Borrowed funds could be injected mainly into productive streams with the highest investment returns to boost economic development.

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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 ◽

Generalized Method Of Moments ◽

Threshold Effect ◽

Sustainable Growth ◽

Sub Saharan Africa ◽

African Countries ◽

Linear Effect ◽

Sub Saharan

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.

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