Abstract
The study investigated the possible nexus between trade liberalization and poverty in 21 African countries covering the period 2005–2014. The study deployed the following econometric tests: descriptive statistics; the correlation matrix and variance inflator; the panel unit root test; the pooled OLS technique; and the panel co-integration test (Johansen co-integration test). In order to confirm the robustness and validity of the regression model result, Ramsey RESET, cross dependence, autocorrelation and heteroscedasticity tests were conducted. The findings reveal that foreign direct investment and inflation rate had a positive relationship with the human development index while exchange rates and trade openness were negatively related to poverty level at the 5 percent level. The study recommended urgent policy measures aimed at revamping the poverty alleviation programmes. The study recommended that in a bid to diversify export market, developing countries should target other developing countries in the spirit of South–South cooperation. Such countries should also consider the joining or strengthening of regional economic integration. Incentives for production and human capacity building in the export-oriented sector should be emplaced. Social and economic policies are required to protect any country against the adverse effects of lowered trade barriers.
Highlights
African countries have been listed predominantly in the less developed category of countries as measured by the human development index (HDI) values based on the computation by UNESCO Institute of Statistics (2015)
This paper aims to contribute to the ongoing argument on the role of trade policy in fostering economic development and the reduction of poverty in developing countries
The first step in the pre-estimation phase is the use of descriptive statistics in order to understand the nature of the data
Summary
African countries have been listed predominantly in the less developed category of countries as measured by the human development index (HDI) values based on the computation by UNESCO Institute of Statistics (2015). The HDI, not economic growth, was created to emphasize that people and their capabilities should be the ultimate criteria for assessing the development of a country. The reduction of poverty levels has been at the heart of almost every agenda of the various African governments since their political independence.
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