Exports, growth and threshold effects in Africa

Abstract

The relationship between openness and growth remains a controversial issue in development economics with many studies focusing on the export-growth relationship. This paper examines whether the relationship between exports and growth found in large cross-section studies also holds in the context of African economies. The paper employs threshold regression techniques to examine whether African countries benefit more from exports when they reach a certain level of development or openness. Our results suggest that there is indeed a positive relationship between exports and growth in Africa. The threshold regression analysis also suggests that it is not necessary for a country to reach a certain level of development or to have an existing export base for this relationship to hold, though it is found that the relationship is stronger for countries that experience higher rates of export growth.

Conditioned Export-Led Growth Hypothesis: A Panel Threshold Regressions Approach

“…Second, another group of studies have applied recent techniques of causality for panel data, as Ahumada and Sanguinetti (1995), and Kónya (2006). Finally, the last group of works, on which this work is included, is represented by the work of Foster (2006) who proposes the use of threshold regression techniques to examine whether any relationship between exports and growth depends upon a third variable.…”

“…Focusing on a comprehensive sample of African countries, Foster (2006) tested for the presence of thresholds in the relationship between exports and growth determined by the initial level of GDP per capita, the share of exports in GDP, and the growth of exports. Overall, his results suggest that there is a significant relationship between the rate of growth of exports and the rate of growth of output, and it is not necessary to be relatively developed in terms of initial income or to have a relatively large export base in order for this relationship to hold.…”

Export, Energy Consumption and Economic Growth Inter-Linkages: The Case of Lithuania

“…Although the export -growth nexus has been still unresolved issue, however, some findings have been revealed in some studies (Foster, 2006;Jun, 2007). The study of Marwan et al (2013) examined the relationship between export and economic growth in Sudan using annual data for the period of 1977 -2010.…”

“…The relationships between energy consumption, export and economic growth have received increasing attention within years (Dawe, 1996;Destek, 2016;Foster, 2006;Furouka, 2017;Jun, 2007;Lin and Moubarak, 2014;Sharma and Dhakal, 1994;Uk Polo, 1994;Ullah, 2009). In the context of different economies, researchers around the world have tried to find the truth about the factors which impact on economic growth.…”

Development Progress in Sub-Saharan Africa: Lessons from Botswana, Ghana, Mauritius, and South Africa

“…The economics literature suggests that the most important causes of this sluggishness are due to various combinations of policy failures-or policy 'syndromes' 3 (e.g., Ndulu et al 2007aNdulu et al , 2007b, institutional weaknesses (e.g., Birdsall 2007;Sachs et al 2004), adverse history (e.g., Acemoglu et al 2001Acemoglu et al , 2002Nunn 2008), political instability and civil conflict (Easterly and Levin 1997;Collier and Hoeffler, 2004;2005), and geographical constraints (e.g., Gallup et al 1999;Naudé 2004Naudé , 2009. A large number of studies have also been concerned with sub-Saharan Africa's trade orientation and performance, and the impact of globalization on Africa-including consideration of foreign direct investment and regional integration (e.g., Carrère 2004;Foster 2006;Fosu 1990;Naudé and Krugell 2007).…”