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Trade Causes Growth in Sub-Saharan Africa

ABSOLUTE VALUE ADVERSE EFFECTS AGRICULTURAL SECTOR AGRICULTURE ARMED CONFLICT BENEFITS OF TRADE BILATERAL TRADE BILATERAL TRADE DATA BUSINESS CYCLE CAPITAL ACCUMULATION COMMODITY PRICE COMPETITIVENESS COUNTRY CHARACTERISTICS COUNTRY LEVEL COUNTRY REGRESSIONS COUNTRY SPECIFIC CUMULATIVE EFFECT CURRENT ACCOUNT DEPENDENT VARIABLE DESCRIPTIVE STATISTICS DEVELOPED COUNTRIES DEVELOPING COUNTRIES DEVELOPING REGIONS DEVELOPING WORLD DEVELOPMENT ECONOMICS DEVELOPMENT GOALS DEVELOPMENT INDICATORS DEVELOPMENT POLICY DEVELOPMENT REPORT DISTRIBUTION OF INCOME DYNAMIC PANEL ECONOMETRIC ANALYSES ECONOMETRIC ESTIMATES ECONOMETRIC MODELS ECONOMETRICS ECONOMIC CONDITIONS ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC LITERATURE EMPIRICAL EVIDENCE ERROR TERM ESTIMATED COEFFICIENT EXPORT VOLUME EXPORTS FINANCIAL SECTOR FIXED EFFECTS FOREIGN MARKETS GDP GDP PER CAPITA GRAVITY MODEL GROSS DOMESTIC PRODUCT GROWTH EFFECT GROWTH MODEL GROWTH MODELS GROWTH RATE GROWTH RATES GROWTH REGRESSIONS IMPORT TARIFFS IMPORT VOLUME IMPORTS INCOME DISTRIBUTION INDEX GROWTH INTERNATIONAL BANK INTERNATIONAL ECONOMICS INTERNATIONAL TRADE LONG-RUN GROWTH MACROECONOMICS MARGINAL EFFECT MEASURE OF TRADE MONETARY POLICY NATIONAL ACCOUNTS NEGATIVE EFFECT PANEL REGRESSIONS PER CAPITA GROWTH POLICY DEBATE POLICY INTERVENTIONS POLICY REFORMS POLICY RESEARCH POLITICAL ECONOMY POLITICAL SYSTEMS POVERTY REDUCTION REAL GDP REGIONAL TRADE REGIONAL TRADE INTEGRATION RENT SEEKING SERIAL CORRELATION SIGNIFICANT EFFECT TAX REVENUES TOTAL FACTOR PRODUCTIVITY TRADE FLOWS TRADE LIBERALIZATION TRADE OPENNESS TRADE POLICIES TRADE POLICY TRADE VOLUMES VOLUME OF TRADE WAGE INEQUALITY
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World Bank, Washington, DC
Africa | Sub-Saharan Africa
2014-08-29T18:40:26Z | 2014-08-29T18:40:26Z | 2012-03

In the 1990s the mainstream consensus was that trade causes growth. Subsequent research shed doubt on the consensus view, as evidence suggested that the identification of the effect of trade on growth was problematic in the existing literature. This paper contributes to this debate by focusing on growth in Sub-Saharan Africa. It estimates the effect of openness to international trade on economic growth with panel data. Employing instrumental variables techniques that correct for endogeneity bias, the empirical evidence suggests that within-country variations in trade openness cause economic growth: a 1 percentage point increase in the ratio of trade over gross domestic product is associated with a short-run increase in growth of approximately 0.5 percent per year; the long-run effect is larger, reaching about 0.8 percent after ten years. These results are robust to controlling for country and time fixed effects as well as political institutions.

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