Trade openness-industrialization nexus revisited in Africa

Dieudonné Mignamissi () and Bernard Nguekeng ()
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Dieudonné Mignamissi: University of Yaounde II
Bernard Nguekeng: University of Yaounde II

Economic Change and Restructuring, 2022, vol. 55, issue 4, No 21, 2547-2575

Abstract: Abstract The objective of this paper is to revisit the nature of the link between trade openness and industrialization in Africa over the period 1990–2019. Given the fragility of the traditional openness indicator, we use the new index proposed by Squalli and Wilson (2011). This index has the advantage of taking into account the country's weight in world trade, making it a better measure of trade openness. The methodology used is that of dynamic panels with the application of the GMM system estimator. We arrive at the results according to which: (i) trade openness, as measured by the Squalli and Wilson (2011) indicator, is a positive factor explaining the level of industrialization in Africa; (ii) the relationship between industrialization and the level of wealth is nonlinear. Beyond the role that factors such as investment, the level of education, natural resources, ICT and governance can play, the results we have reached recommend that trade openness should be prioritised as a fundamental determinant of industrialization to remain one of the keys to Africa's economic development. This result remains consistent after several robustness tests.

Keywords: Trade openness; Industrialization; Africa; Squalli and Wilson index; GMM (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s10644-022-09401-8

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