Effects of urbanization and international trade on economic growth, productivity, and employment: Case of selected countries in Africa

Abstract

The rapid urbanization taking place in Africa is resulting in the emergence of large urban agglomerations. Despite the potential and typical economic benefits associated with the emergence of such agglomerations elsewhere, not much can be said of Africa's urbanization. With urbanization projections pointing to a continued increase, there is a need to understand the urbanization and economic dynamics relationship in order to exploit the full potential of this wave. Using a panel data set of urbanization rate, trade, economic growth, productivity and employment in six African countries for the period 1991–2019, we explore this relationship by adopting the cross-sectional augmented autoregressive distributed lag (CS-ARDL) approach using data from six African countries. The findings show that there is a significant relationship between urbanization, international trade, economic growth, productivity, and employment. they also show a causal relationship between the variables studied. In addition, the findings of this study reveal that international trade contributes, significantly, to improving the productivity in long run and the economic growth and employment increase the productivity in short run and employment in the selected African countries. This research study, therefore, contributes to the critical argument that African urbanization and international trade have significant economic potential and therefore need to be encouraged and managed effectively. This provides evidence for planners and policy-makers to back policy geared toward sustainable urbanization and diversified international trade that will contribute to the structural transformation of African countries.