Estimating the effect of economic globalization on welfare in Africa

Samuel Baidoo, Daniel Sakyi (), Enock Ayesu (), Grace Nkansa Asante () and John Bosco Dramani ()
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Grace Nkansa Asante: Kwame Nkrumah University of Science and Technology
John Bosco Dramani: Kwame Nkrumah University of Science and Technology

SN Business & Economics, 2023, vol. 3, issue 9, 1-25

Abstract: Abstract This paper estimates the effect of economic globalization on welfare in Africa. A panel data on 44 African countries spanning the period 1996–2017 is utilized and the two-step system generalized method of moments is employed for the analysis. The results reveal that economic globalization enhances welfare in Africa. The results further show support for the compensation hypothesis which states that economic globalization increases government expenditure, and hence improvement in welfare. The implication of the findings is that economic globalization is good for African countries. Therefore, on the policy front, there is the need for African countries to explore such economic openness (economic globalization) to their advantage, but with caution—ensuring that trade agreements, policies such as tariffs and taxes are not compromized. This will ensure that African countries obtain the full benefits associated with economic globalization.

Keywords: Economic globalization; Trade globalization; Financial globalization; Welfare (search for similar items in EconPapers)
JEL-codes: C23 F15 F60 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s43546-023-00543-z

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