Economic growth and openness in Africa: What is the empirical relationship?

This study examines the effects of trade policies on economic growth in Africa. The econometric methodology follows the cross-country studies by Barro ( 1991 ) and Kandiero and Chitiga ( 2003 ) with empirical application to a panel of 36 African countries observed over the period 1980 to 2009. Panel...

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Bibliographic Details
Published inApplied economics letters Vol. 19; no. 18; pp. 1903 - 1907
Main Authors Chang, Ching-Cheng, Mendy, Michael
Format Journal Article
LanguageEnglish
Published Taylor & Francis 01.12.2012
Routledge
Taylor and Francis Journals
SeriesApplied Economics Letters
Subjects
Africa
Econometrics
Economic growth
Foreign aid
Foreign direct investment
Gross domestic product
openness
Transparency
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Summary:This study examines the effects of trade policies on economic growth in Africa. The econometric methodology follows the cross-country studies by Barro ( 1991 ) and Kandiero and Chitiga ( 2003 ) with empirical application to a panel of 36 African countries observed over the period 1980 to 2009. Panel regressions are carried out using the fixed-effects models. The aim is to provide an empirical evidence for the driving force of Africa's economic growth. The results illustrate that openness in trade and investment is positively related to economic growth significantly. However, foreign aid, gross national savings and investment have negative relationships to both Gross Domestic Product (GDP) growth and GDP. Using South Africa as benchmark, the regional performance indicates that North Africa is the best one in generating positive GDP growth from Foreign Direct Investment (FDI), followed by Middle Africa whilst East Africa and West Africa compete for the third and fourth positions.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
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ISSN:1350-4851
1466-4291
DOI:10.1080/13504851.2012.676728