Trade policy, export performance and economic growth: evidence from sub-Saharan Africa

Abstract

This paper uses the data for twelve sub-Saharan African (SSA) countries to investigate the validity of the hypothesis that rapid growth of exports accelerates economic growth in developing countries. Using vector autoregression (VAR) econometric methodology which allows variables to be treated as potentially endogenous. we found that sizeable variations in real output growth in ten of the twelve SSA countries are due to changes in trade policies, exports, and investment shocks. The results from these twelve SSA countries suggest that it is possible to stimulate economic growth through an outward-looking strategy of exports expansion that removes the bias toward import substitution and against exports.