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Comparative Performance of Trade Openness and Sovereign Debt Accumulation in Fostering Economic Growth of Sub-Saharan African Countries

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  • Samson Edo

Abstract

In the last four decades, sub-Saharan African countries have witnessed a substantial increase in trade openness and sovereign debt (foreign public debt and domestic public debt). The direct and interactive effects of these factors on economic growth are investigated in this study. The investigation covers the period 1980–2020 and employs the generalised method of moment methodology. The estimation results reveal that the direct effect of trade openness and domestic public debt is significantly favourable. The direct effect of foreign public debt is, however, found to be unfavourable. The results also reveal that the interactive effect of trade openness and domestic public debt is significantly favourable, whereas the interactive effect of trade openness and foreign public debt is fairly favourable. The estimation results thus imply that trade openness and sovereign debt are complementary drivers of economic growth in sub-Saharan African countries. In spite of the favourable role of trade openness and sovereign debt, economic growth has yet to achieve the desired level, which does not augur well for employment and welfare. The prospects of growth could be enhanced by strengthening the impact of trade openness and sovereign debt. However, policy makers should be aware of the direct negative impact of foreign public debt on economic growth, and the need to put measures in place to manage it. JEL Codes: F23, H63, F43, O55

Suggested Citation

  • Samson Edo, 2024. "Comparative Performance of Trade Openness and Sovereign Debt Accumulation in Fostering Economic Growth of Sub-Saharan African Countries," Foreign Trade Review, , vol. 59(1), pages 98-116, February.
    • Handle: RePEc:sae:fortra:v:59:y:2024:i:1:p:98-116
    DOI: 10.1177/00157325221145452
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    More about this item

    Keywords

    Trade openness; Sovereign debt; economic growth; developing countries;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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