Price Distortions and Economic Growth in Sub-Saharan Africa
To what extent has Sub-Saharan Africa's slow economic growth over the past five decades been due to price and trade policies that have discouraged production of agricultural relative to non-agricultural tradables? This paper uses a new set of estimates of policy distortions to relative prices to address this question econometrically. We first test if these policy distortions respond to economic growth, using rainfall and international commodity price shocks as instrumental variables. We find that on impact there is no significant response of relative price distortions to changes in real GDP per capita. We then test the reverse proposition and find a statistically significant and sizable negative effect of relative price distortions on the growth rate of Sub-Saharan African countries. Our fixed effects estimates suggest that, during 1960-2005, a one standard deviation increase in distortions to relative prices reduced the region's real GDP per capita growth rate by about half a percentage point per annum.
|Date of creation:||Sep 2011|
|Contact details of provider:|| Postal: Adelaide SA 5005|
Phone: (618) 8303 5540
Web page: http://www.economics.adelaide.edu.au/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Pesaran, M.H. & Smith, R., 1992.
"Estimating Long-Run Relationships From Dynamic Heterogeneous Panels,"
Cambridge Working Papers in Economics
9215, Faculty of Economics, University of Cambridge.
- Pesaran, M. Hashem & Smith, Ron, 1995. "Estimating long-run relationships from dynamic heterogeneous panels," Journal of Econometrics, Elsevier, vol. 68(1), pages 79-113, July.
- Sebastian Edwards, 1991.
"Trade Orientation, Distortions and Growth in Developing Countries,"
NBER Working Papers
3716, National Bureau of Economic Research, Inc.
- Edwards, Sebastian, 1992. "Trade orientation, distortions and growth in developing countries," Journal of Development Economics, Elsevier, vol. 39(1), pages 31-57, July.
- Emily Oster, 2012.
"Routes Of Infection: Exports And Hiv Incidence In Sub-Saharan Africa,"
Journal of the European Economic Association,
European Economic Association, vol. 10(5), pages 1025-1058, October.
- Emily Oster, 2007. "Routes of Infection: Exports and HIV Incidence in Sub-Saharan Africa," NBER Working Papers 13610, National Bureau of Economic Research, Inc.
- Kym Anderson & William A. Masters, 2009.
"Distortions to Agricultural Incentives in Africa,"
World Bank Publications,
The World Bank, number 2607.
- Vousden,Neil, 1990. "The Economics of Trade Protection," Cambridge Books, Cambridge University Press, number 9780521346696, December.
- O'Rourke, Kevin H, 2000.
"Tariffs and Growth in the Late 19th Century,"
Royal Economic Society, vol. 110(463), pages 456-483, April.
- Richard Blundell & Steve Bond, 1995.
"Initial conditions and moment restrictions in dynamic panel data models,"
IFS Working Papers
W95/17, Institute for Fiscal Studies.
- Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
- R Blundell & Steven Bond, "undated". "Initial conditions and moment restrictions in dynamic panel data model," Economics Papers W14&104., Economics Group, Nuffield College, University of Oxford.
- Blundell, R. & Bond, S., 1995. "Initial Conditions and Moment Restrictions in Dynamic Panel Data Models," Economics Papers 104, Economics Group, Nuffield College, University of Oxford.
- Barrios Cobos, Salvador & Bertinelli, Luisito & Strobl, Eric, 2008. "Trends in Rainfall and Economic Growth in Africa: A Neglected Cause of the Growth Tragedy," Proceedings of the German Development Economics Conference, Zurich 2008 41, Verein für Socialpolitik, Research Committee Development Economics.
- Alcala, Francisco & Ciccone, Antonio, 2001.
"Trade and Productivity,"
CEPR Discussion Papers
3095, C.E.P.R. Discussion Papers.
- Francisco Alcalá & Antonio Ciccone, 2001. "Trade and productivity," Economics Working Papers 580, Department of Economics and Business, Universitat Pompeu Fabra, revised Jul 2002.
- Francisco Alcalá & Antonio Ciccone, 2003. "Trade and Productivity," Working Papers 12, Barcelona Graduate School of Economics.
- Moritz Schularick & Solomos Solomou, 2011. "Tariffs and economic growth in the first era of globalization," Journal of Economic Growth, Springer, vol. 16(1), pages 33-70, March.
- Valenzuela, Ernesto & Wong, Sara & Sandri, Damiano, 2007. "Distortions to Agricultural Incentives in Ecuador," Agricultural Distortions Working Paper 48394, World Bank.
- Anderson, Kym & Kurzweil, Marianne & Martin, Will & Sandri, Damiano & Valenzuela, Ernesto, 2008.
"Measuring distortions to agricultural incentives, revisited,"
World Trade Review,
Cambridge University Press, vol. 7(04), pages 675-704, October.
- Anderson, Kym & Kurzweil, Marianne & Martin, Will & Sandri, Damiano & Valenzuela, Ernesto, 2008. "Measuring distortions to agricultural incentives, revisited," Policy Research Working Paper Series 4612, The World Bank.
- Anderson, Kym & Kurzweil, Marianne & Martin, Will & Sandri, Damiano & Valenzuela, Ernesto, 2008. "Measuring Distortions to Agricultural Incentives, Revisited," CEPR Discussion Papers 6924, C.E.P.R. Discussion Papers.
- Easterly, W & Levine, R, 1996.
"Africa's Growth Tragedy : Policies and Ethnic Divisions,"
536, Harvard - Institute for International Development.
- William Easterly & Ross Levine, 1997. "Africa's Growth Tragedy: Policies and Ethnic Divisions," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1203-1250.
- Ndulu,Benno J. & O'Connell,Stephen A. & Bates,Robert H. & Collier,Paul & Soludo,Chukwuma C., 2009. "The Political Economy of Economic Growth in Africa, 1960â€“2000," Cambridge Books, Cambridge University Press, number 9780521127752, December.
- Kym Anderson & Will Martin, 2009.
"Distortions to Agricultural Incentives in Asia,"
World Bank Publications,
The World Bank, number 2611.
- Collier, Paul & Goderis, Benedikt, 2008.
"Commodity Prices, Growth, and the Natural Resource Curse: Reconciling a Conundrum,"
17315, University Library of Munich, Germany.
- Paul Collier & Benedikt Goderis, 2007. "Commodity Prices, Growth, and the Natural Resource Curse: Reconciling a Conundrum," CSAE Working Paper Series 2007-15, Centre for the Study of African Economies, University of Oxford.
- Kym Anderson, 2009. "Distortions to Agricultural Incentives : A Global Perspective, 1955-2007," World Bank Publications, The World Bank, number 9436.
- Michael A. Clemens & Jeffrey G. Williamson, 2002. "Why Did the Tariff-Growth Correlation Reverse After 1950?," NBER Working Papers 9181, National Bureau of Economic Research, Inc.
- Sandri, Damiano & Valenzuela, Ernesto & Anderson, Kym, 2007. "Economic And Trade Indicators For Asia, 1960 To 2004," Agricultural Distortions Working Paper 48435, World Bank.
When requesting a correction, please mention this item's handle: RePEc:adl:wpaper:2011-32. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dmitriy Kvasov)
If references are entirely missing, you can add them using this form.