Towards ICT diffusion and trade liberalisation on inclusive growth in Sub-Saharan Africa

Abstract

AbstractWhile the debate over the nexus between trade liberalization and inclusive growth is progressively reaching some consensus in emerging and developing economies, the empirical findings are mixed for sub-Saharan African (SSA) countries. Some of the SSA countries experience rapid growth in information and communication technology (ICT) diffusion manifesting in increased green wealth via the invention of new ideas, access to wider markets like the African Continental Free Trade Area (AfCFTA), promoting accountability, social inclusion, and e-governance among others. The present study critically assesses how ICT diffusion modulates trade liberalization on inclusive growth throughout the 2005–2020 periods for 48 SSA countries. This study contributes empirically and methodologically to literature, specifically on the construction of the ICT index, inclusive growth index, and adoption of a better befitting econometric model. The study explores the direct impacts of ICT diffusion and trade liberalization, and their indirect impacts using an interaction term on inclusive growth. Contrary to the prior expectations, trade liberalization does not lead to inclusive growth in the SSA region, but ICT diffusion has a positive and significant impact on inclusive growth. However, the interaction term of ICT and trade liberalization improves inclusive growth. Therefore, the study advocates for policies that would build a knowledge-based human capital, stimulate innovation in socio-economic systems, and develop ICT infrastructure and its penetration among others, with the expectation that as AfCFTA takes effect, ICT diffusion will facilitate intra-regional trade, enhancing inclusive growth in the African region among other sound policy suggestions.