The impact of Trade Opening on Economic Growth in Africa
A Panel Study
The objective of this study is to see if, in the long term and in the short term, trade openness stimulates economic growth by focusing on Africa over the period 1999 to 2019 for 35 African countries (20 French-speaking countries and 15 English-speaking countries). We use panel cointegration tests and a Pooled Mean Group (PMG) estimation model from Pesaran, Shin & Smith (1999) using three measures of trade openness (COM, EXP and IMP) to explore the relationship between economic growth and trade openness. The results show evidence of a cointegrating relationship between the variables of interest and reveal that trade openness can have a favorable impact on long-term growth. They show that the benefits of trading are not automatic. The effects of trade openness on growth may differ depending on the level of trade openness. The results of the estimations show a positive long-term relationship between the openness variables of Model 1 and Model 2 and economic growth and a negative relationship for the openness variable of Model 3 in the long run. In the short run, however, the openness variables show a negative link with economic growth in all models. Our results suggest that trade openness must be accompanied by complementary policies aimed at improving accessibility to investments and human capital which can be considered as a source of high-tech trade and technological know-how that allows us to consolidate high-tech intensive industries and the innovative capacities of competitive domestic enterprises to improve the performance of international trade and, consequently, economic growth. African countries should improve the quality of institutions and the capacity to adapt and acquire new skills. The globalization of trade should therefore not be considered in isolation. Additional policies are needed to strengthen its impact on economic growth.
Copyright (c) 2021 Abou Bacar Attoumane
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