How Does the Health Sector Benefit from Trade Openness? Evidence from Sub‐Saharan Africa

Abstract

AbstractThe linkages between international trade and economic performance has received significant attention from policymakers and researchers. There is consensus in the literature that improved trade openness corresponds to improved economic growth. In this study, we argue that trade openness has a significant impact on population health outcomes and financing. The study employed a balanced panel data for 42 sub‐Saharan African (SSA) countries over the period 1995–2013. Population health status was measured by total life expectancy at birth, infant mortality rate and under‐five mortality rate. Three main estimation models were used: (1) fixed effect (FE); (2) random effect (RE); and (3) the generalized method of moments (GMM) in estimating the relationships. The results showed that trade openness has a positive and significant effect on life expectancy, a negative and significant effect on the infant mortality rate and a negative impact of trade openness on the under‐five mortality rate. A positive effect of trade openness on health financing was also realized. The findings of the study support international trade integration and emphasize the need for countries to be conscious of gains from trade within sub‐sectors of the economy.