Effect of trade shock on inequality, unemployment and inflation in Sub-Saharan Africa

Chinwe Okoyeuzu, Ebere Ume Kalu, Angela Ukemenam and Augustine Ujunwa

International Journal of Business and Globalisation, 2023, vol. 33, issue 4, 514-529

Abstract: We studied the impact of trade shocks on inequality, unemployment and inflation in 35-Sub-Saharan African countries from 1997 to 2018. Using the VECM framework, we confirm a strong correlation among trade, inequality, unemployment and inflation, and find that adverse shock from trade promotes inequality, unemployment and inflation in Sub-Saharan African countries. This implies that the gains from trade are elusive in Sub-Saharan Africa, and the channels of the negative shocks could be imports surge relative to exports; job loss by workers in sectors with greater initial exposure to export surge; imported inflation and labour immobility between trade partners. Based on the findings, the study recommends that Sub-Saharan African countries need to rethink their trade engagement, in terms of restructuring their economies and strategic engagement with trade partners to optimise the gains of trade.

Keywords: trade shocks; inequality; competitiveness problem; VECM; cointegration. (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijbglo:v:33:y:2023:i:4:p:514-529

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