e-ISSN 2231-8534
ISSN 0128-7702
Shuaibu Sidi Safiyanu and Soo Yean Chua
Pertanika Journal of Social Science and Humanities, Volume 28, Issue 2, June 2020
Keywords: Economic growth, foreign trade, panel data, sub-Saharan Africa
Published on: 26 June 2020
This paper investigates the short-run and long-run dynamics between foreign trade and economic growth in 40 sub-Saharan African countries over the period of 1992-2018. It utilized Cross-sectional Augmented Autoregressive Distributed Lag (CS-ARDL) panel data estimations to handle cross-sectional dependency and dynamic heterogeneity of the countries under investigation. The empirical result shows that foreign trade significantly increased the economic growth of sub-Saharan African countries in the short-run but had a significant negative effect on economic growth in the long-run. The results also confirm that total trade, imports, exports, and trade balance Granger caused economic growth in sub-Saharan African countries. For sub-Saharan Africa trade to have a larger effect on economic growth, countries need to modify their structures of a trade by diverting from exports of raw materials to high value-added goods. Moreover, trade policy measures should be directed towards the promotion of investments in capital intensive sectors and human capital development that can absorb technological improvement from advanced countries.
ISSN 0128-7702
e-ISSN 2231-8534
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