Threshold Effect of Raw Material Prices on Economic Growth of African Countries

Houngbedji Sèwanoudé Honoré ()
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Houngbedji Sèwanoudé Honoré: Faculty of Economics and Management, University of Abomey-Calavi, Abomey-Calavi, Benin

Journal of International Commerce, Economics and Policy (JICEP), 2021, vol. 12, issue 02, 1-18

Abstract: We study the nonlinear effects of raw material prices measured by that of cotton product on the economic growth of a sample of African countries for the period of 1991–2019. Using the procedure for determining endogenous thresholds (Hansen, 1999) [Threshold effects in non-dynamic panels: Estimation, testing, and inference. Journal of Econometrics, 93, 345–368], the study revealed that raw material prices positively affect economic growth when the prices reach a threshold above 96.1. These results indicate that to be effective, any economic policy measure aimed at accelerating the economic growth of these commodity-dependent countries must take into account the level of raw material price indices, the quality of governance, and the level of financial development.

Keywords: Raw material prices; economic growth; threshold effects (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1142/S1793993321500095

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