Trade Trade Policy And Economic Growth In Sub-saharan Africa

In the SSA region poor trade and economic growth performances co-exist with a relativelyrnprotective trade policy for the past three-decade. Some consider such protective trade policies asrnthe main causes of slow economic growth in the region. With an objective to see the impact ofrntrade and trade policy on economic growth, this paper employs a pure cross-sectional as well asrnpanel data (including panel co-integration) analysis techniques. We have controlled the observedrnendogeneity of trade by using a simultaneous equations regression (2SLS method), and we alsornrun regressions with robust standard errors to handle problems related to the normality andrnhomogeneity assumptions.rnAccordingly, while we have found trade shares (and also import and export shares in GDP) to bernsignificantly and positively correlated with growth, we get no evidence in support of tradernliberalization policies. That is, even if the trade policy variables reveal a significantly negativernimpact on trade, they failed to show the same effect on growth contrary to the conventionallyrnalleged benefits of trade liberalization policies. The results show that there is a positive butrninsignificant correlation between import tariff and economic growth whereas taxation of exportsrnreveals a positive but insignificant correlation. This shows the "possible" gains and losses fromrna premeditated import protection and excessive export taxation respectively.rnKey words: Trade and economic growth, Trade Policy, Panel data analysis

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