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The Nexus Between Commodity Terms and National Terms of Trade of Sub-Sahara African Countries: Implication for Intersectoral Linkage

Author

Listed:
  • Anu Keshiro Toriola

    (Olabisi Onabanjo University, Ago-Iwoye, Nigeria)

  • Emmanuel Oladapo George

    (Olabisi Onabanjo University, Ago-Iwoye, Nigeria)

  • Walid Gbadebo Adebosin

    (College of Primary Education, Noforija, Epe, Lagos)

Abstract

This study investigates the relationship between national terms of trade (price of export relative to import) and commodity terms of trade (price of primary commodity relative to manufactured goods) using data on forty-eight (48) Sub-Sahara Africa (SSA) countries. Data sourced from the International Monetary Fund (IMF) database and World Bank (WB) Development Indicator (WDI) was estimated via panel autoregressive distributed lag (panel-ARDL). The result provides evidence of a stable positive long-run relationship between commodity terms of trade and terms of trade of individual Sub-Sahara Africa countries. This implies that a decline in the relative price of primary commodity will result in a fall in aggregate terms of trade in the long run. The study submitted that commodity terms of trade is a useful indicator of the movement in the aggregate terms of trade of countries in Sub-Sahara Africa and the validity of Prebisch-Singer hypothesis (PSH). We recommend a big-push investment in the production and export of primary commodity since the trend in the terms of trade of primary commodity reflects the trend in the terms of trade of manufactured goods.

Suggested Citation

  • Anu Keshiro Toriola & Emmanuel Oladapo George & Walid Gbadebo Adebosin, 2021. "The Nexus Between Commodity Terms and National Terms of Trade of Sub-Sahara African Countries: Implication for Intersectoral Linkage," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 19(1), pages 79-98.
    • Handle: RePEc:seb:journl:v:19:y:2021:i:1:p:79-98
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    More about this item

    Keywords

    Commodity terms of trade; National terms of trade; Prebisch-Singer Hypothesis; Panel-ARDL; Sub-Sahara Africa;
    All these keywords.

    JEL classification:

    • P20 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - General
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models

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