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Trade facilitation, institutions, and sustainable economic growth: Empirical evidence from Sub‐Saharan Africa

Shen Jiahao, Ridwan Lanre Ibrahim, Kazeem Ajide () and David Mautin Oke

African Development Review, 2022, vol. 34, issue 2, 201-214

Abstract: This paper examines the direct and interactive impacts of trade facilitation and institutions on sustainable economic growth (SEG) for 41 Sub‐Saharan African economies from 2005 to 2019. The study explores the components of trade facilitation focusing on costs, documents and days (exports and imports) with the aggregated index (TFindex) and institutions, including voice and accountability, government effectiveness, regulatory quality, rule of law, political stability and violence, and control of corruption, used on GDP per capita growth. The empirical evidence relies on the two‐step dynamic‐system generalized method of moments estimator, accounting for endogeneity, simultaneity, measurement error and reverse causality concerns. The study finds that facilitating trade procedures is a viable option for achieving SEG in the Sub‐Saharan Africa region. In addition, institutions driven by government effectiveness, political stability, and regulatory quality are boosters to SEG in the region. Lastly, the interactive impacts of trade facilitation and institutions positively predict the SEG. The study suggests that achieving efficient trading procedures and a sturdy institutional framework will enhance full exploration of the growth potential in SEG.

Date: 2022
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