Effect of Trade Openness and Financial Openness on Economic Growth in Sub-Saharan African Countries.

  • Aremo Adeleke Gabriel
  • Arambada Oluwaseun David
Keywords: Trade Openness; Financial Openness; Economic Growth; Sub-Saharan Africa; GMM

Abstract

The study examines the individual and joint effects of trade openness and financial openness on economic growth in sub-Saharan African (SSA) countries within the period 1980 and 2017. The SSA countries are divided into two broad categories-low income countries and middle-income countries. The dynamic panel analysis using the techniques of Difference Generalised Method of Moments (GMM) and system GMM were employed. Overall, the empirical findings on low income countries show that trade openness has significant positive impact on economic growth. However, financial openness and the joint trade and financial openness do not have significant positive impact on economic growth. In the case of middle-income countries, the effect of trade openness on economic growth is mixed. However, both financial openness and the joint trade and financial openness do not spur economic growth. Overall, there is no evidence of simultaneous openness hypothesis in SSA economies. Thus, while the economy is open to trade, it is expedient to ensure that appropriate and productive Greenfield   foreign direct investments are attracted to SSA economy.

Published
2020-11-21
Section
Articles

Journal Identifiers


eISSN: 2453-5966
print ISSN: 1821-8148