Africa’s trade with China and the US is one of the international issues affecting development in the continent. This paper, therefore, examines the effects of COVID-19 on Africa’s trade with the two countries by investigating whether the pandemic has changed the trends of the trade. The article explores the responses of the individual trade of China and the US with Africa to their own shocks, without and with the pandemic, using the vector autoregressive (VAR) model and monthly data covering 1970m01 (January 1970) to 2020m07 (July 2020). The results show that China’s trade performs better while responding to a shock to America’s trade than America’s trade does while responding to a shock to China’s trade, without and with COVID-19. This finding suggests that China has a stronger trade footing in Africa and that COVID-19 had not changed the trends of Africa’s trade with China and America, even with the impact of the pandemic on China. China’s dominant trade status in Africa is probably due to the country’s large investment and aid in the continent. The key policy focus of Africa on trading with China and the US should therefore be how to achieve optimum trilateral trade thresholds in the face of potential trade-offs.
This paper empirically examines the growth effects of stabilisation funds and fiscal rules in oil‐rich African countries, using Nigeria as a case study. The analysis captures the ‘international standard’ of the two fiscal instruments by empirically comparing the effects of Nigerian instruments with those of non‐African oil‐exporting countries (i.e. Norway and Mexico). The results show that the fiscal instruments are effective in Nigeria and that the effectiveness is comparable to that of non‐African economies, implying that the Nigerian instruments meet ‘international standard’. The paper also discusses the development policy implications of the results, one of which is that the fiscal instruments can be used to control risky behaviours of economic agents in oil‐rich African economies. For example, since the instruments are effective in increasing growth (i.e. real GDP growth) and limiting its volatility, they can be employed to control increases in demand for and supply of risky sex caused by increases in real per capita income during oil booms.
This paper examines the role of trade as a transmission channel of U.S. recessions into Africa, using Nigeria as a case study and time series data spanning 1981 to 2019. This involves examining how the impacts of U.S. recessions on Nigeria’s growth spread across time, based on an autoregressive distributed lag (ARDL) cointegration model. The main findings are: (i) When the trade channel is not controlled for in the analysis, U.S. recessions do not have statistically significant impacts on growth in Nigeria both in the short-run and long-run. (ii) When the trade channel is controlled for, the recessions have statistically significant impacts on growth via the channel, but only in the short-run and with a lapse of time. (iii) The positive impact of trade on growth occurs in the long-run, even in the face of the recessions. The key policy implication of these findings for African countries is that trade is indeed influential in them, but they need to diversify their trade away from large economies, such as the U.S., by increasing intra-Africa trade, in order to limit the effects of shocks from such economies and maximize the benefits of trade. This requires better performance of Africa’s trade blocs (e.g. ECOWAS) and the coordination of per jure and de facto trade policies within the continent generally.
JEL Codes:F1, F14, E32, O51, O55
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