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Rural-Urban Inequality in Africa: A Panel Study on the Effects of Trade Liberalization and Financial Depending

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  • Mina Baliamoune-Lutz

    () (University of North Florida)

  • Stefan H. Lutz

    (University of Manchester)

Abstract

Using panel data from 39 countries, this paper examines the effects of financial deepening and openness to trade and foreign capital (FDI) on rural-urban inequality in Africa. Four estimations were performed: OLS pooled cross-section, GLS pooled cross-section, fixed effects model and an adjusted fixed effects specification with regional dummy terms. We construct an alternative measure of rural-urban inequality, namely the ratio of growth in agricultural output to growth of manufacturing output. Overall, the econometric results show that openness to trade seems to help reduce rural-urban inequality. However, the empirical evidence does not unambiguously delineate the nature and significance of the impact FDI and financial deepening have on the rural-urban gap. The findings imply that there may be some support for the so-called offsetting-trend in inequality (OTI) hypothesis.

Suggested Citation

  • Mina Baliamoune-Lutz & Stefan H. Lutz, 2005. "Rural-Urban Inequality in Africa: A Panel Study on the Effects of Trade Liberalization and Financial Depending," Journal of African Development, African Finance and Economic Association, vol. 7(1), pages 1-19.
  • Handle: RePEc:afe:journl:v:7:y:2005:i:1:p:1-19
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    References listed on IDEAS

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    Cited by:

    1. Simplice Asongu & Jacinta C. Nwachukwu, 2017. "Recent finance advances in information technology for inclusive development: a survey," Working Papers 17/009, African Governance and Development Institute..
    2. Mohamed Amara & AbdelRahmen El Lahga, 2016. "Tunisian constituent assembly elections: how does spatial proximity matter?," Quality & Quantity: International Journal of Methodology, Springer, pages 65-88.
    3. Simplice Asongu, 2016. "Reinventing Foreign Aid For Inclusive And Sustainable Development: Kuznets, Piketty And The Great Policy Reversal," Journal of Economic Surveys, Wiley Blackwell, vol. 30(4), pages 736-755, September.
    4. Simplice Asongu & De Moor Lieven, 2015. "Recent advances in finance for inclusive development: a survey," Working Papers 15/005, African Governance and Development Institute..
    5. Simplice Asongu & Jacinta C. Nwachukwu, 2017. "Quality of Growth Empirics: Comparative Gaps, Benchmarking and Policy Syndromes," Working Papers 17/034, African Governance and Development Institute..
    6. Asongu, Simplice, 2014. "Taxation, foreign aid and political governance: figures to the facts of a celebrated literature," MPRA Paper 63792, University Library of Munich, Germany.
    7. Simplice Asongu, 2014. "Reinventing foreign aid for inclusive and sustainable development: a survey," Working Papers 14/033, African Governance and Development Institute..

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