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Is trade openness a barrier to industrialization? Evidence from Sub-Saharan Africa

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  • Gislain Stéphane Gandjon Fankem

    (University of Yaoundé II)

  • Cédric Feyom

    (University of Ngaoundéré)

Abstract

The literature on the effect of trade openness on industrialization shows contrasting results. Using a new empirical framework, we contribute in this paper to the removal of this indeterminacy by studying the influence of trade openness on industrialization in a sample of Sub-Saharan African countries. We use the new measure of trade openness and approximate industrialization through three complementary indicators: manufacturing value-added as a percentage of GDP, manufacturing employment as a share of total employment, and the industrial competitiveness index. Estimations are carried out by a two-step system generalized method of moments (GMM). Over the period 1985–2014, our results show that in Sub-Saharan Africa, the level of industrialization is a decreasing function of trade openness. The magnitude of this negative effect is conditioned by very low levels of foreign direct investment and human capital. Our results, which stand up to many robustness checks, seem to support the implications of the infant industry argument.

Suggested Citation

  • Gislain Stéphane Gandjon Fankem & Cédric Feyom, 2024. "Is trade openness a barrier to industrialization? Evidence from Sub-Saharan Africa," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 160(2), pages 713-759, May.
    • Handle: RePEc:spr:weltar:v:160:y:2024:i:2:d:10.1007_s10290-023-00497-2
    DOI: 10.1007/s10290-023-00497-2
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    More about this item

    Keywords

    Trade openness; Industrialization; Sub-Saharan Africa;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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