Background: In the last two decades, the world experienced two overlapping global shocks – that is, the 2008–2009 financial crisis and the COVID-19 lockdowns – with severe social and economic consequences on African economies that have, once again, brought to the fore the intricate role that globalisation plays in economic growth because of grave risks that often accompany it.Aim: We consider three research questions about globalisation: (i) does globalisation heighten economic growth? (ii) is there a statistically significant threshold level of globalisation above which globalisation affects growth differently than at lower levels? (iii) what factors moderate the globalisation-economic growth nexus?Setting: A panel of 47 selected countries from Africa from 2001 to 2018 is under scrutiny.Method: To begin, it applies an overlapping five-year moving average (MA) to smoothen the data. In addition, we employ the revised globalisation index and the two-step systems generalised method of the moment (GMM) in its empirical strategy.Results: We find a largely insignificant relationship between globalisation and economic growth. We attribute these results to Africa’s infinitesimal share – less than 5% – in foreign direct investment (FDI) and global trade, acute infrastructure deficit and the lack of relevant skills that lead to productivity losses and weak performance within the international business ecosystem. We also find, among others, that globalisation is more effective in countries with more gross capital formation, higher population and urban growth rates.Conclusion: For Africa to maximise its growth potential from globalisation, sound policies should be put in place to promote trade, FDI, domestic capital formation and urbanisation. We suggest that future studies investigate the long-run equilibrium relationship between globalisation and economic growth.
The African Continental Free Trade Area (AfCFTA) entered into force in May 2019 after surpassing the required 22 ratifications. This article combines the decision support model (DSM) and the Global Trade Analysis Project (GTAP) computable general equilibrium (CGE) model to make quantitative assessments of the expected welfare and trade effects of the AfCFTA on Nigerian and South African sectors possessing sustained export potential within the AfCFTA member states. By specifying two scenarios of AfCFTA membership, the simulation results reveal positive welfare gains for Nigeria (USD 146.12 million) and South Africa (USD 1.46 billion), originating from the GTAP sectors identified with sustainable export opportunities in the AfCFTA member states. The trade deal is also expected to be net-trade-creating, with a net trade of USD 2.15 billion at the global level. The assessments in this article are valuable in informing trade policy in light of core export competencies and the size, growth and consistency of the import demand in AfCFTA countries. It is also the first time elements of a product-level export market analytical tool are harmonised with a CGE model in the welfare and trade assessments of regional and/or bilateral trade arrangements. Policymakers and export promotion associations in both Nigeria and South Africa are recommended to utilise the results found in this article as a point of departure in leveraging the welfare-improving sustained export opportunities identified within the AfCFTA.
Orientation: Retail sector multinational enterprises (MNEs) face challenges and follow diverse strategies when they expand into foreign markets.Research purpose: The major aim of this article is to determine how three well-established retail sector MNEs, namely, Walmart, Carrefour and Shoprite, addressed the challenges they faced and structured their market entry strategies in the African continent.Motivation for the study: While the opportunities in Africa are perpetual, breaking into the African market is not so straightforward. It is in this regard that the importance of determining the challenges faced by established retail MNEs in Africa and the valuable lessons that can be drawn by small and upcoming MNEs, from the experiences of these prominent MNEs studied, is exposed.Research approach/design and method: This article employs a mixed-method approach (i.e. case study and semi-structured interviews) to determine the challenges faced by Walmart, Carrefour and Shoprite when they expanded into Africa, and how they overcame those challenges.Main findings: The findings reveal that Walmart and Shoprite possess a substantial footprint in sub-Saharan Africa, while Carrefour enjoys a substantial footprint in North Africa and Francophone Countries of west Africa. Furthermore, Walmart follows a risk-averse approach when expanding into the African continent and only expands into new foreign markets based on the market potential and the ability to succeed. Carrefour’s main strategy is to achieve international expansion into Africa through the acquisition of international partnerships with local and regional firms. Shoprite, on the other hand, maintains that no written strategy was followed when the retail MNE expanded into Africa. It is also evident that external factors are significant for MNEs seeking to invest in Africa.Practical/managerial implications: Not all MNEs expanding into Africa have been successful. Accordingly, the practical value of this article rests upon the lessons that small and upcoming MNEs can learn from the experiences of MNEs that are now well established in African markets.Contribution/value-add: This article contributes to existing foreign direct investment (FDI) literature by identifying challenges that Walmart, Carrefour and Shoprite faced when they expanded into Africa. In addition, lessons that aspiring and small MNEs, specifically in the retail sector, can learn from these three retail MNEs that are now well established in African markets are drawn.
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