Citations


Contact Us

For Marketing, Sales and Subscriptions Inquiries
Rockefeller Center, 45 Rockefeller Plaza
20th Flr Unit #5, New York, NY 10111
United States

Conference List

The Impact of Trade on Poverty in Sub-Saharan Africa: Do Sources Matter?

Regret Sunge

,

Nyasha B. Kumbula

,

Biatrice S. Makamba

Regret Sunge 1 ,

Nyasha B. Kumbula 1 Biatrice S. Makamba 1 
  1. Department of Economics, Great Zimbabwe University, Zimbabwe. 1

Pages: 234-244

DOI: 10.18488/journal.62.2021.83.234.244

Share :

Article History:

Received: 02 November, 2020
Revised: 26 January, 2021
Accepted: 10 March, 2021
Published: 12 April, 2021


Abstract:

Global trade development has provided noteworthy global poverty gains since the 1990s. Accordingly, Africa has gradually engaged itself in trade and trade policy reforms through multilateral and regional trade agreements among other initiatives. Nonetheless, poverty levels in the Sub-Saharan Africa (SSA) region remain relatively high. Recognizing that existing evidence on trade-poverty nexus is based on aggregate trade, we provide a new perspective on SSA by disaggregating trade by sources for the period 2003-2017. We employed the Generalised Method of Moments (GMM) estimation of a panel data model derived from the Modified Basic Household Model and Neo-Conservative Poverty Theory for analysis. The results document poverty gains from trade liberalization, with the extent varying according to sources. Specifically, trade from MENA and within SSA was found to offer more gains. Furthermore, findings suggest that poverty gains from trade are strengthened with better institutional quality. It follows that to accelerate poverty gains from trade liberalization, SSA should promote intra-Africa trade as well as trade with MENA countries. To accelerate the gains, Africa has to invest in better institutions, in particular, to improve governance and corruption eradication.
Contribution/ Originality
This study contributes to existing literature on trade-poverty nexus in two ways. Firstly, instead of basing conclusions on aggregate trade, we focus on trade by sources. We disaggregate SSA’s trade by regional sources. Secondly, we introduce control of corruption interaction term to control for institutional quality in the analysis.

Keywords:

Trade, Poverty, Corruption, Sub-Saharan Africa, Panel data, Generalised methods of moments.

Reference:

Acemoglu, D., & Robinson, J. A. (2012). Why nations fail: The origins of power, prosperity, and poverty (pp. 1-571). Crown Publishers, Crown Publishing Group, A Division of Random House.

Aigheyisi, O. S. (2013). Economic growth and human development effect of globalization in the Nigerian economy: Evidence in the democratic era. Journal of Economics and Sustainable Development, 4(12), 24-33.

Arellano, M., & Bover, O. (1995). Another look at the instrumental variable estimation of error-components models. Journal of Econometrics, 68(1), 29-51. Available at: https://doi.org/10.1016/0304-4076(94)01642-d.

Bayar, Y., & Sezgin, H. F. (2017). Trade openness, inequality and poverty in Latin American countries. Ekonomika, 96(1), 47-57. Available at: https://doi.org/10.15388/ekon.2017.1.10663.

Berg, A., & Kruger. (2003). Trade, growth and poverty: A selective survey. Washington D.C: IMF Working Paper, WP/03/30International Monetary Fund.

Blundell, R., & Bond, S. (1998). Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics, 87(1), 115-143. Available at: https://doi.org/10.1016/s0304-4076(98)00009-8.

Cepparulo, A., Cuestas, J. C., & Intartaglia, M. (2016). Financial development, institutions and poverty alleviation: An empirical analysis. Working Paper Series No. 2/2016.

Chaudhry, I. S., & Sharif, I. (2013). Does trade liberalization reduce poverty and inequality? Empirical evidence from Pakistan? Pak J Commer Soc Sci Pakistan Journal of Commerce and Social Sciences, 7(3), 569-587.

Dollar, D., & Kraay, A. (2001). Trade, growth and poverty. Washington, D.C: Mimeo. Development Research Group, The World Bank.

Dollar, D., & Kraay, A. (2003). Institutions, trade, and growth: Revisiting the evidence. Journal of Monetary Economics, 50(1), 133–162.

Goldberg, P. K., & Pavcnik, N. (2007b). Distributional effects of globalization in developing countries. Journal of Economic Literature, 45(1), 39–82.

Gujarati, D. (2004). Basic econometrics. New York: McGraw-Hill Companies.

Hansen, L. P. (1982). Large sample properties of generalized method of moments estimators. Econometrica, 50(4), 1029-1054.

Kaidi, N., Sami, M., & Mehdi, B. A. (2019). Financial development, institutional quality and poverty reduction. Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, 141(1), 131-156. Available at: 10.1007/s11205-018-1836-0.

Kis-Katos, K., & Sparrow, R. (2015). Poverty, labor markets and trade liberalization in Indonesia. Journal of development Economics, 117, 94-106. Available at: https://doi.org/10.1016/j.jdeveco.2015.07.005.

Kpodar, K., & Singh, R. (2011). Does financial structure matter for poverty? Evidence from developing countries. World Bank Policy Research Working Paper, No. WPS5915.

Kruiniger, H. (2009). GMM estimation and inference in dynamic panel data models with persistent data. Econometric Theory, Cambridge University Press, 25(5), 1348-1391. Available at: https://doi.org/10.1017/s0266466608090531.

Ladd, H. F. (2012). Education and poverty: Confronting the evidence. Journal of Policy Analysis and Management, 31(2), 203-227. Available at: https://doi.org/10.1002/pam.21615.

Le Goff, M., & Singh, R. J. (2014). Does trade reduce poverty? A view from Africa. Journal of African Trade, 1(1), 5-14.

Li, S. (2009). The effect of trade liberalization on Chinese rural poverty. Asian Social Science, 5(5), 187-195.

Magombeyi, M. T., & Odhiambo, N. M. (2017). Causal relationship between FDI and poverty reduction in South Africa. Cogent Economics & Finance, 5(1), 1357901. Available at: https://doi.org/10.1080/23322039.2017.1357901.

Manson, N., Ogujiuba, K., & Adeola, A. (2005). The impacts of trade liberalisation on poverty in Nigeria: Dynamic simulations in a CGE model. Final Report to the Poverty and Economic Policy (PEP) Research Network.

NEPAD. (2019). First Continental Report on the Implementation of Agenda 2063.African Union-Development Agency (AUDA).

Newfarmer, R., & Sztajerowska, M. (2012). Trade and employment in a fast-changing world.In: Lippold, Douglas (Ed.), Policy priorities for international trade and jobs (pp. 7-73). Paris: OECD.

Nissanke, M., & Thorbecke, E. (2010). The poor under globalization in Asia, Latin America, and Africa. WIDER Studies in Development Economics. Oxford and New York: Oxford University Press.

Okungbowa, F., & Eburajolo, O. (2014). Globalization and poverty rate in Nigeria: An empirical analysis. International Journal of Humanities and Social Science, 4(11), 126-135.

Onakoya, A., Johnson, B., & Ogundajo, G. (2019). Poverty and trade liberalization: Empirical evidence from 21 African countries. Economic research-Ekonomska istraživanja, 32(1), 635-656.

Pietrucha, J., Żelazny, R., Kozłowska, M., & Sojka, O. (2018). Import and FDI as channels of international TFP spillovers. Equilibrium. Quarterly Journal of Economics and Economic Policy, 13(1), 55-72. Available at: https://doi.org/10.24136/eq.2018.003.

PovcalNet. (2020). (Online analysis tool), World Bank, Washington, DC. Retrieved from: http://iresearch.worldbank.org/PovcalNet/ .

Pradhan, B. K., & Mahesh, M. (2014). Impact of trade openness on poverty: A panel data analysis of a set of developing countries. Economics Bulletin, 34(4), 2208-2219.

Rashid, A., & Intartaglia, M. (2017). Financial development – does it lessen poverty? Journal of Economic Studies, 44(1), 69-86.

Shuaibu, M. (2017). The effect of trade liberalisation on poverty in Nigeria: A micro–macro framework. International Economic Journal, 31(1), 68-93.

Singh, I., Squire, L., & Strauss, J. (1986). A survey of agricultural household models:- Recent findings and policy implications. The World Bank Economic Review, 1(1), 149-179. Available at: https://doi.org/10.1093/wber/1.1.149.

Singh, R. J., & Huang, Y. (2015). Financial deepening, property rights, and poverty: Evidence from Sub-Saharan Africa. Journal of Banking and Financial Economics, 1(3), 130-151. Available at: https://doi.org/10.7172/2353-6845.jbfe.2015.1.6.

UNCTAD. (2020). Trade statistics. Retrieved from: https://unctad.org/statistics.

WB and WTO. (2019). The role of trade in ending poverty. Geneva: World Trade Organization.

Winters, L. A. (2002). Trade liberalization and poverty: What are the links? The World Economy, 25(9), 1339-1367.

Winters, L. A., McCulloch, N., & McKay, A. (2004). Trade liberalization and poverty: The evidence so far. Journal of Economic Literature, 42(1), 72-115. Available at: https://doi.org/10.1257/002205104773558056.

Yusuf, M., Malarvizhi, C. A., & Khin, A. A. (2013). Trade liberalization economic growth and poverty reduction in Nigeria. International Journal of Business and Management, 8(12), 42-47.

Zahonogo, P. (2016). Trade and economic growth in developing countries: Evidence from Sub-Saharan Africa. Journal of African Trade, 3(1-2), 41-56.

Statistics:

Google Scholor ideas Microsoft Academic Search bing Google Scholor

Funding:

This study received no specific financial support.

Competing Interests:

The authors declare that they have no competing interests.

Acknowledgement:

All authors contributed equally to the conception and design of the study.

Related Article

( 1 ) Impact of Labour, Capital and Human Resources in Productivity of Transport Firms in Nigeria
( 2 ) The Impact of Investment Climate Reforms on the Development of Small and Medium Sized Enterprises in Nigeria: A Policy Brief
( 3 ) The Impact of Human Capital on Economic Growth: Evidence from Tunisia Using Star and Stecm Models
( 4 ) Impact of Food Beverage Price Index and Exchange Rate Volatility on Economic Growth
( 5 ) Impact of Microfinance Lending On Economic Growth of Third world Nations: Study of Nigeria
( 6 ) The Impact of Rice Production, Consumption and Importation in Nigeria: The Political Economy Perspectives
( 7 ) The Impact of Dividend Policy on Shareholders’ Wealth before and After Financial Melt down: Evidence from FMCG Sector in India
( 8 ) Factors Impacting on SMEs Internationalization: Dairy Industry in Zimbabwe
( 9 ) The Life-Time of Tomorrow Party of Japan and Its Negative Impacts on the Anti-Nuclear Movements in Japan’s Politics
( 10 ) An Assessment of the Impact of Information Communication Technology (ICT) On the Administration of Public Records: A Case Study of the Bolgatanga Municipal Assembly in the Upper East Region of Ghana-West Africa
( 11 ) Impact of Inflation on Per Capita Income in Emerging Economies: Evidence from BRICS Nations
( 12 ) The Impact of the Global Financial Crisis on the Debt, Liquidity, Growth, and Volume of Companies in Palestine Stock Exchange
( 13 ) The Impact of the Decline in Oil Prices in Latin America
( 14 ) Measuring the Quality of Islamic Banks Services and Its Impact on Customers Satisfaction A Survey Study on the Islamic Banks Customers in Lattakia-Syria
( 15 ) The Indirect Impact of Overconfidence on the Performance of Tunisian Firms Through their Financing Structure
( 16 ) Impact of FDI on Environmental Quality of China
( 17 ) Panel Data Analysis of the Impact of Economic Freedom as Well as Economic Conditions, The Quality of Life, and Public Education Spending on U.S. Undocumented Immigrant Settlement Patterns
( 18 ) The Role of Social Entrepreneurship in Pakistan and its Impact on Economy
( 19 ) Scenario Economic Impact Analysis of Offshore Fishing Tournaments in Ocean City
( 20 ) Impact of Telecommunications Market Liberalization on Labor Productivity in Economic Community of West African States
( 21 ) Impact of Participatory Decision Making on Organisational Goal Attainment
( 22 ) The Impact of Organisational Culture on Public Sector Performance: A Case Study of Local Authorities in Zimbabwe
( 23 ) An Empirical Assessment of the Impact of Access to Credit on Farm Output: A Case Study of Sefwi-Wiawso Municipality Ghana
( 24 ) An Investigation of the Impact of Organisational Structure on Organisational Performance
( 25 ) Impact of Exchange Rate Fluctuation on Selected Economic Sectors of the Nigerian Economy
( 26 ) Impact of Asymmetric Government Spending on Real Balances Demand
( 27 ) Investigating the Impact of Business Alignment on Job Gratification in an Organization: The Case of a University in Egypt
( 28 ) Impact of Network Finance Development on Inflation: Evidence from Chinese Market
( 29 ) The Impact of Military Spending on Economic Wellbeing in Nigeria
( 30 ) Determinant of MSMEs Performance and its Impact on Province GRDP in Indonesia
( 31 ) Determinants of Financial Performance and its Impact on the Growth of Islamic Bank Assets on Indonesia
( 32 ) The Impact of Land Price Movements on the Properties in Croatia
( 33 ) The Impact of Social Media on Economic Growth: Empirical Evidence of Facebook, YouTube, Twitter and Pinterest
( 34 ) The Impact of Economic Growth, Oil Price, and Financial Globalization Uncertainty on Financial Development: Evidence from Selected Leading African Countries
( 35 ) Impact of Savings on Economic Growth in Africa
( 36 ) An Empirical Analysis of the Impact of Decentralization on Poverty in Cameroon
( 37 ) The Impact of Merger and Acquisition on the Financial Performance of the Nasdaq Listed Small Size Technology Companies
( 38 ) An Empirical Investigation of the Impact of FDI, Export and Gross Domestic Savings on the Economic Growth in Bangladesh
( 39 ) The Impact of Data Frequency on the Level of Exchange Rate Pass-through to Consumer Prices in Nigeria
( 40 ) Analyzing the Impact of Eco-Innovation on Carbon Emissions Abatement: Evidence from OECD Countries
( 41 ) The Impact of Covid-19 Pandemic on the Global Economy: Emphasis on Poverty Alleviation and Economic Growth
( 42 ) Impacts of Domestic Savings and Domestic Investment on Economic Growth: An Empirical Study for Pakistan
( 43 ) The Impact of Trade on Poverty in Sub-Saharan Africa: Do Sources Matter?
( 44 ) The Impact of Fundamental Factors on the Share Price of Micro-Sized Nasdaq Listed Technology Companies
( 45 ) On the OCC Announcement Allowing US Banks to Use Stablecoins and the Immediate Impact on Cryptocurrency Valuations
( 46 ) Impacts of the U.S.-China Trade Conflicts News on U.S. and Chinese Stock Returns
( 47 ) Relational Capabilities under Moderating and Mediating Effects to Understand their Impacts on Firm Financial Performance
( 48 ) Analysis of Factors Affecting Capital Structure and the Impact on LQ-45 Share Price in 2015-2018
( 49 ) Inflationary Rate in Nigeria: Impact of Foreign Capital Inflows
( 50 ) Does the Mena Countries May Converge in GDP to Southern European One? The Effects of International Trade
( 51 ) The Potential of Rural–Urban Linkages for Sustainable Development and Trade
( 52 ) An Empirical Test on Effect of Intra-Product Trade on Regional Income Distribution: The Case of Liaoning, China
( 53 ) Development of the National Economies and the Foreign Trade Relations between Ukraine and Bulgaria (In the Period 2005-2014)
( 54 ) Forecasting-Based Carry Trade Using Pegged Currency: A Case of Omani Rial
( 55 ) The Effects of Exchange Rate Variability on Trade Flows in Nigeria: A Cointegration Analysis
( 56 ) Trade Policy and Democracy for Development in Central African Countries
( 57 ) Problems of Bilateral Trade Deficit between Bangladesh and India: A 2SLS Regression Analysis
( 58 ) Rethinking Port Role as Transport Corridor under Symbiosis Theory-Case Study of China-Europe Trade Transportation
( 59 ) Trade Union Performance and Industrial Relations Climate in the Nigerian Petroleum Sector
( 60 ) Nexus among Foreign Exchange Reserve, Remittance and Trade Openness: An Empirical Investigation in the Case of Bangladeshi Economy
( 63 ) Econometric Analysis of Dutch Disease Implication of China-Africa Trade
( 64 ) Making Poverty A History in Africa: The Role of the G8
( 65 ) Fiscal Decentralization and Poverty Reduction: Citizens View
( 66 ) Good Governance, Rural Development and Poverty Alleviation in Nigeria: Issues and Challenges
( 67 ) Micro-Credits and Poverty Reduction in Dar-Es-Salaam, Tanzania: A Case Study of Dar-Es-Salaam Commercial Bank
( 68 ) Income Elasticity of Poverty: Estimates for South Asian Countries
( 69 ) Determining Rural Poverty in Manga Del Cura – Ecuador Non Delimited Zone
( 70 ) Interfaces Between Road Infrastructure and Poverty in Africa: The Case of Malawi, 1994-2013
( 71 ) An Analysis of Chinas Poverty Research Based on CiteSpace
( 72 ) Sectoral Credit Allocation of Deposit Money Banks and Poverty Reduction in Nigeria
( 73 ) Growing and Building: Collaboration of Urban Poverty Reduction Strategy
( 74 ) Perceived Poverty and Alleviation Efforts of Kogi State Community and Social Development Agencies in Kogi State: An Empirical Investigation
( 75 ) Financial Inclusion and Poverty Alleviation: The Contribution of Commercial Banks in West Africa
( 77 ) Exploring the Linkages between Remittances, Economic Growth and Poverty: Empirical Evidence from Pakistan
( 80 ) Investigating the Nexus among Poverty Alleviation, Unemployment, and Economic Development in Nigeria
( 81 ) Industrialization and Economic Growth in Sub-Saharan Africa: The Role of Human Capital in Structural Transformation
( 82 ) External Debt and Economic Growth: Two-Step System GMM Evidence for Sub-Saharan Africa Countries
( 83 ) Foreign Direct Investment - Growth Linkage in Sub-Saharan Africa: Is Governance a Mediating Factor?
( 84 ) Consumers’ Behavioural Intention to Adopt Mobile Banking in Rural Sub-Saharan Africa Using an Extension of Technology Acceptance Model: Lessons from Zimbabwe
( 85 ) Determinant of Tax Revenue Effort in Sub-Saharan African Countries: A Stochastic Frontier Analysis
( 86 ) Accountability and Transparency in Nation Building: A COVID-19 Experience in Sub-Saharan Africa
( 88 ) Women in Parliament and Public Health Expenditure: Evidence from Sub-Saharan African Countries