trade for development. determinants of economic growth in COMESA region. A panel data approach

Gassahun Getenet Gelaye

No grh69, OSF Preprints from Center for Open Science

Abstract: The objective of this paper is to analyze the determinants of economic growth in COMESA member countries from 1985-2015 using a panel data approach. In the study both descriptive and econometric analysis were used. For model specification a Hausman test and link tests were used. A Hausman test suggested for fixed effect model as an appropriate model in this study. In addition, other CLM assumptions were detected before the actual regression result and there were found a problem of serial correlation and heteroskedasticity. As a result, a cluster robust of standard error test was used to handle the problem. The regression result show that foreign direct investment, broad money, trade openness, and human capital growth were found to have positive and significant impact on economic growth in the region. In contrast, gross fixed capital formation in this study was found to have insignificant impact on economic growth in COMESA member countries. Moreover, government final consumption expenditure, inflation and population growth affects economic growth negatively and significantly in COMESA member countries. In this paper a policy recommendation appeal to appreciate domestic saving and investment from the residence, and reduction of tariff for imported capital goods and domestic innovation, reforms to be forwarded more open to global trade for the region (COMESA) member countries through reduction of trade barriers between the COMESA member countries and the rest of the world, and government consumption or investment in the region should be geared towards more productive activities for economic growth were discussed in this research paper.

Date: 2020-11-29
New Economics Papers: this item is included in nep-fdg and nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:osf:osfxxx:grh69

DOI: 10.31219/osf.io/grh69

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