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

Author

Listed:
  • 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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    Citations

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    Cited by:

    1. 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.
    2. 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..
    3. Asongu, Simplice, 2014. "Reinventing foreign aid for inclusive and sustainable development: a survey," MPRA Paper 65300, University Library of Munich, Germany.
    4. Asongu, Simplice & De Moor, Lieven, 2015. "Recent advances in finance for inclusive development: a survey," MPRA Paper 67299, University Library of Munich, Germany.
    5. Madhu Sehrawat & A. K. Giri, 2016. "Financial development, poverty and rural-urban income inequality: evidence from South Asian countries," Quality & Quantity: International Journal of Methodology, Springer, vol. 50(2), pages 577-590, March.
    6. Asongu, Simplice A. & Nwachukwu, Jacinta C., 2017. "Quality of Growth Empirics: Comparative gaps, benchmarking and policy syndromes," Journal of Policy Modeling, Elsevier, vol. 39(5), pages 861-882.

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