Growth by destination: the role of trade in Africa's recent growth episode

Mullings, R. ORCID: 0000-0002-5569-9117 and Mahabir, A. ORCID: 0000-0001-9867-2830, 2018. Growth by destination: the role of trade in Africa's recent growth episode. World Development, 102, pp. 243-261. ISSN 0305-750X

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Abstract

Over the period 1990–2009, Africa has experienced a distinct and favourable reversal in its growth fortunes in stark contrast to its performance in the preceding decades, leading to a variety of hypotheses seeking to explain the phenomenon. This paper presents both cross-country and panel-data evidence on the causal factors driving the recent turnaround in Africa's growth and takes the unique approach of disaggregating the separate growth impacts of Africa's bilateral trade with: China, Europe and America. The empirical analysis presented in this paper suggests that the primary and most robust causal factors driving Africa's recent growth turnaround are private sector- and foreign direct investment. Although empirical evidence of the role of bilateral trade openness in Africa's recent growth emerges within a fixed effect estimation setting, these results are not as robust when endogeneity and other issues are fully accounted for. Among the three major bilateral partners, Africa's bilateral trade with China has been a relatively important factor spurring growth on the continent and especially so in resource-rich, oil producing and non-landlocked countries. The econometric results are not as supportive of growth-inducing effects of foreign aid. These findings emerge after applying a variety of panel data specifications to the data, including the recent fixed Effects Filtered (FEF) estimator introduced by Pesaran and Zhou (2014) and the dynamic panel Generalized Method of Moments (GMM) estimator, which allows for endogeneity between trade and growth.

Item Type: Journal article
Publication Title: World Development
Creators: Mullings, R. and Mahabir, A.
Publisher: Elsevier
Date: February 2018
Volume: 102
ISSN: 0305-750X
Identifiers:
NumberType
10.1016/j.worlddev.2017.10.009DOI
S0305750X17303236Publisher Item Identifier
Divisions: Schools > Nottingham Business School
Depositing User: Linda Sullivan
Date Added: 20 Nov 2017 13:29
Last Modified: 20 Nov 2017 13:31
URI: http://irep.ntu.ac.uk/id/eprint/32050

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