The growth effect of trade openness on African countries: Evidence from using an instrumental variable panel smooth transition model

Emilie Kinfack, Lumengo Bonga-Bonga

Research output: Contribution to journalArticlepeer-review

5 Citations (Scopus)

Abstract

This paper assesses the relationship between trade openness and economic growth in Africa by accounting for the heterogeneity of African countries. In addition, the paper contributes to the literature on trade openness and economic growth nexus by applying the instrumental variable panel smooth transition regression, a methodology that accounts for nonlinearity and endogeneity in the relationship between the two variables. The results of the empirical analysis reveal that the investment ratio is a channel through which trade openness affects economic growth in the African continent. In addition, the relationship between trade openness and economic growth varies according to the degree of a country's development in Africa. The study finds a negative relationship between openness and growth in low-income countries. Conversely, for upper-income countries, the coefficients of trade indicators are positive and statistically significant. The results indicate that African countries are not homogeneous, especially concerning trade openness and economic growth nexus.

Original languageEnglish
Pages (from-to)366-379
Number of pages14
JournalBulletin of Economic Research
Volume75
Issue number2
DOIs
Publication statusPublished - Apr 2023

Keywords

  • Africa
  • economic growth
  • smooth transition regression
  • trade openness

ASJC Scopus subject areas

  • Economics and Econometrics

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