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Economic Fluctuations and Growth in Sub-Saharan Africa: The Importance of Import Instability

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Author Info

  • A. K. Fosu

Abstract

The traditional thesis that export instability (XI) is deleterious to economic growth in developing economies has received mixed empirical results. For African countries, recent research suggests that the effect of XI is weak, but that capital (investment) instability (KI) adversely influences economic growth. The current study argues that in many of these nations, imports are likely to be critical to the growth process, while exports represent only one of the various sources of investment resources. Hence, import instability (MI) may pose a more serious problem than XI in hindering economic growth. Employing 1968-1986 World Bank data for 33 sub-Saharan African countries, XI, KI and MI variables are calculated for each country as the standard errors around the respective 'best-fitted' trends over the sample period. These instability measures and additional World Bank data are then used to estimate an augmented production function that controls for the effects of labour, capital, and exports. The study finds that although KI is still a relevant argument of the production function, MI appears to be even more important, while XI is extraneous.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/00220380412331321971
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Journal of Development Studies.

Volume (Year): 37 (2001)
Issue (Month): 3 ()
Pages: 71-85

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Handle: RePEc:taf:jdevst:v:37:y:2001:i:3:p:71-85

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Related research

Keywords: Import Instability; Economic Fluctuations; Growth; Labour; Capital; Exports; Sub-Saharan Africa;

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Cited by:
  1. Guillaumont, Patrick, 2008. "An Economic Vulnerability Index: Its Design and Use for International Development Policy," Working Paper Series RP2008/99, World Institute for Development Economic Research (UNU-WIDER).
  2. Baliamoune-Lutz, Mina & Ndikumana, Léonce, 2007. "The Growth Effects of Openness to Trade and the Role of Institutions: New Evidence from African Countries," MPRA Paper 6189, University Library of Munich, Germany.
  3. Patrick Guillaumont, 2010. "Assessing the Economic Vulnerability of Small Island Developing States and the Least Developed Countries," Working Papers id:2625, eSocialSciences.
  4. Yago, Milton & Morgan, Wyn, 2008. "The impact of policy reversal on economic performance in Sub-Saharan Africa," European Journal of Political Economy, Elsevier, vol. 24(1), pages 88-106, March.
  5. Odedokun, Matthew, 2003. "Analysis of Deviations and Delays in Aid Disbursements," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  6. Ogunleye, Eric Kehinde, 2011. "Emerging Evidence on the Relative Importance of Sectoral Sources of Growth in Sub-Saharan Africa," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  7. Matthew Odedokun, 2010. "Analysis of Deviations and Delays in Aid Disbursements," Working Papers id:3212, eSocialSciences.

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