TRADE LIBERALIZATION, INSTITUTIONS AND ECONOMIC GROWTH IN SELECTED SUB-SAHARAN AFRICAN COUNTRIES.

摘要

A major discourse in literature is that one of the causes of the limited growth effects of trade liberalization is the weakness of institutions. The main objective of this study is to investigate the impact of trade liberalization and institutions on economic growth in SSA countries. Institutions are crafted by man to create a peaceful habitation and reduce uncertainty in the exchange of values; and they play key roles in the management of economies in recent years. The Neo-classical economists believed that the economic growth of a country depends on the level of investment since investment would help increase the level of aggregate output. udIn order to achieve the objectives of this study, the study employed econometric analyses involving the Least Square Dummy Variables (LSDV) and the Generalized Method of Moments (GMM) techniques for the period 1985-2012 on thirty selected SSA countries. Secondary data were used for the estimations. The study is significant considering the fact that trade and institutions have been found to exert some measure of influence on the growth of countries. However, evidence has shown that not much has been done in relating institutions to trade in SSA. udThe major findings of the study revealed that trade liberalization and institutions had a significant positive impact on economic growth; that trade liberalization had a better impact on economic growth when strong political and cultural institutions are in place than when strong economic institutions are in place; and that trade liberalization and institutions impact more on economic growth in Central Africa than in East/Southern and West Africa sub-regions. Therefore, the study recommended that the governments in SSA countries should ensure that funds are channelled appropriately to projects of economic importance so as to further develop their institutions better. These SSA countries should also create conducive economic and political environments that will bring about free international trade between them and other countries of the world. Also, there is need for the easy enforceability of contracts so as to make trading activities easier and institutions to function better.ud