IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/2038.html
   My bibliography  Save this paper

Good governance and trade policy : are they the keys to Africa's global integration and growth?

Author

Listed:
  • Ng, Francis
  • Yeats, Alexander

Abstract

Economists often argue that the level and structure of a country's trade barriers and the quality of its governance policies (for example, regulating foreign investment or limiting commercial activity with red tape) have a major influence on its economic growth and performance. One problem testing those relations empirically was the unavailability of objective cross-country indices of the quality of governance and statistics on developing countries'trade barriers. The authors use new sources of empirical information to test the influence of trade and governance policies on economic performance. They use a model similar to those used in the literature on causes and implication of economic growth but focus more heavily on the World Bank's index of the speed with which countries are integrating into the world economy. Their results show that countries that adopted less restrictive governance and trade policies achieved significantly higher levels of per capita GDP; experienced higher growth rates for exports, imports, and GDP; and were more successful integrating with the world economy. Regression results indicate that national trade and governance regulations explain over 60 percent of the variance in some measures of economic performance, implying that a country's own national policies shape its rate of development, industrialization, and growth. Their tests provide new insights into the phenomenon of economic"convergence,"showing that poorer open countries are integrating more rapidly into the global economy than others. This finding parallels what others have observed about economic growth rates. They test their empirical results in a case study asking whether inappropriate national policies have caused Sub-Saharan Africa's dismal economic performance. The evidence strongly supports this proposition. Indices of the quality of national governance show that African countries have generally adopted the most inappropriate (restrictive) fiscal, monetary, property, and wage policies and that their own trade barriers (including customs procedures constraining commercial activity) are among the world's highest. Improving African trade and governance policies to levels currently prevailing in such (non-expecptional) countries as Jordan, Panama, and Sri Lanka would be consistent with a seven fold increase in per capita GDP (to about $3,500) and an annual increase of 3 or 4 percentage points in the growth rate for this variable.

Suggested Citation

  • Ng, Francis & Yeats, Alexander, 1999. "Good governance and trade policy : are they the keys to Africa's global integration and growth?," Policy Research Working Paper Series 2038, The World Bank.
  • Handle: RePEc:wbk:wbrwps:2038
    as

    Download full text from publisher

    File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/1999/03/31/000094946_99032505585398/Rendered/PDF/multi_page.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. A. Amjadi & A. Yeats, 1995. "Non‐tariff Barriers Facing Africa: The Uruguay Round," South African Journal of Economics, Economic Society of South Africa, vol. 63(3), pages 212-224, September.
    2. Amjadi, Azita & Yeats, Alexander, 1995. "Nontariff barriers Africa faces : what did the Uruguay Round accomplish, and what remains to be done?," Policy Research Working Paper Series 1439, The World Bank.
    3. Singer, Hans W. & Gray, Patricia, 1988. "Trade policy and growth of developing countries: some new data," World Development, Elsevier, vol. 16(3), pages 395-403, March.
    4. Kravis, Irving B, 1970. "Trade as a Handmaiden of Growth: Similarities between the Nineteenth and Twentieth Centuries," Economic Journal, Royal Economic Society, vol. 80(323), pages 850-872, December.
    5. Balassa, Bela, 1978. "Exports and economic growth : Further evidence," Journal of Development Economics, Elsevier, vol. 5(2), pages 181-189, June.
    6. Ng, Francis & Yeats, Alexander, 1997. "Open economies work better! did Africa's protectionist policies cause its marginalization in world trade?," World Development, Elsevier, vol. 25(6), pages 889-904, June.
    7. Michaely, Michael, 1977. "Exports and growth : An empirical investigation," Journal of Development Economics, Elsevier, vol. 4(1), pages 49-53, February.
    8. Barro, Robert J & Sala-i-Martin, Xavier, 1992. "Convergence," Journal of Political Economy, University of Chicago Press, vol. 100(2), pages 223-251, April.
      • Barro, R.J. & Sala-I-Martin, X., 1991. "Convergence," Papers 645, Yale - Economic Growth Center.
      • Barro, Robert J. & Sala-i-Martin, Xavier, 1992. "Convergence," Scholarly Articles 3451299, Harvard University Department of Economics.
    9. Amjadi, A. & Reincke, U. & Yeats, A.J., 1996. "Did External Barriers Cause the Marginalization of Sub-Saharan Africa in World Trade," World Bank - Discussion Papers 348, World Bank.
    10. Amjadi, Azita*Reinke, Ulrich*Yeats, Alexander, 1996. "Did external barriers cause the marginalization of sub-Saharan Africa in world trade?," Policy Research Working Paper Series 1586, The World Bank.
    11. Patrick Low & Alexander Yeats, 1995. "Nontariff Measures and Developing Countries: Has the Uruguay Round Leveled, the Playing Field?," The World Economy, Wiley Blackwell, vol. 18(1), pages 51-70, January.
    12. Robert J. Barro & Xavier Sala-i-Martin, 1991. "Convergence across States and Regions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(1), pages 107-182.
    13. Sam Laird & Alexander Yeats, 1990. "Quantitative Methods for Trade-Barrier Analysis," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-11141-1, December.
    14. Jagdish N. Bhagwati, 1978. "Anatomy of Exchange Control Regimes," NBER Chapters, in: Foreign Trade Regimes and Economic Development: Anatomy and Consequences of Exchange Control Regimes, pages 7-52, National Bureau of Economic Research, Inc.
    15. Jagdish N. Bhagwati, 1978. "Foreign Trade Regimes and Economic Development: Anatomy and Consequences of Exchange Control Regimes," NBER Books, National Bureau of Economic Research, Inc, number bhag78-1, March.
    16. World Bank, 1996. "Global Economic Prospects and the Developing Countries 1996," World Bank Publications - Books, The World Bank Group, number 32391, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Polimeni, John M. & Iorgulescu Polimeni, Raluca & Trees, W. Scott, 2007. "Extending The Augmented Solow Growth Model To Explain Transitional Economies," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 4(1), pages 65-76, March.
    2. Joseph Rajabu Kangile & Zena Theopist Mpenda & Reuben M. J. Kadigi & Charles Peter Mgeni, 2022. "The Effects of Trade Governance on Sugar Trade and Its Landscape of Policy Practices in Tanzania," SAGE Open, , vol. 12(3), pages 21582440221, September.
    3. Muhammad Jawad & Zaib Maroof & Munazza Naz, 2022. "Industrial development dynamics: An exquisite examination of European Union and United Kingdom," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(1), pages 125-136, January.
    4. Mohamed Ismail Sabry, 2022. "Arab-German Trade and Institutions: The Effect of Good Governance on Arab Exports to Germany," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(5), pages 2400-2437, October.
    5. Bagai, Shweta & Wilson, John S., 2006. "The data chase : what's out there on trade costs and nontariff barriers ?," Policy Research Working Paper Series 3899, The World Bank.
    6. Nihal Pitigala, 2010. "Global Economic Crisis and Developing Countries," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 11(1), pages 1-20, March.
    7. Ahmed, Wasim & Hussain, Safdar & Jafar, Rana Muhammad Sohail & Guang-Ju, Wang & Rabnawaz, Ambar & Saqib, Zulkaif Ahmed & JianZhou, Yang, 2016. "Impacts of Trade Liberalization on Dairy Industry in China," MPRA Paper 70385, University Library of Munich, Germany.
    8. Florin Alexandru LUCA & Ana Iolanda VODĂ & Dumitru FILIPEANU, 2014. "Current Trends In The Foreign Trade," SEA - Practical Application of Science, Romanian Foundation for Business Intelligence, Editorial Department, issue 5, pages 393-400, November.
    9. Aron, Janine, 2000. "Growth and Institutions: A Review of the Evidence," The World Bank Research Observer, World Bank Group, vol. 15(1), pages 99-135, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nasim Shah Shirazi & Turkhan Ali Abdul Manap, 2005. "Export-Led Growth Hypothesis: Further Econometric Evidence From South Asia," The Developing Economies, Institute of Developing Economies, vol. 43(4), pages 472-488, December.
    2. Nasim Shah Shirazi & Turkhan Ali Abdul Manap, 2004. "Exports and Economic Growth Nexus: The Case of Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 43(4), pages 563-581.
    3. M.A.B. Siddique & E.A. Selvanathan, 1998. "Export Performance and Economic Development in Thailand," Economics Discussion / Working Papers 98-24, The University of Western Australia, Department of Economics.
    4. Tarlok Singh, 2010. "Does International Trade Cause Economic Growth? A Survey," The World Economy, Wiley Blackwell, vol. 33(11), pages 1517-1564, November.
    5. Muhammad Shahbaz & Pervaz Azim & Khalil Ahmad, 2011. "Exports-Led Growth Hypothesis in Pakistan: Further Evidence," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 1(3), pages 182-197.
    6. Khalafalla, Khalid Yousif & Webb, Alan J., 2000. "Exports And Economic Growth Under Structural Change: A Co-Integration Analysis Of Evidence From Malaysia," Working Papers 14595, International Agricultural Trade Research Consortium.
    7. Ng, Francis & Yeats, Alexander, 1997. "Open economies work better! did Africa's protectionist policies cause its marginalization in world trade?," World Development, Elsevier, vol. 25(6), pages 889-904, June.
    8. Bhanumurthy, N.R. & Bose, Sukanya & Panda, Swayamsiddha, 2014. "Modeling India's External Sector: Review and Some Empirics," Working Papers 14/138, National Institute of Public Finance and Policy.
    9. Armah Bartholomew, 2000. "Does Latin America Have More to Gain From Exchange Rate Liberalization than Sub-Saharan Africa?," International Economic Journal, Taylor & Francis Journals, vol. 14(2), pages 113-132.
    10. Mehmet Balcilar & Zeynel Ozdemir, 2013. "The export-output growth nexus in Japan: a bootstrap rolling window approach," Empirical Economics, Springer, vol. 44(2), pages 639-660, April.
    11. Saima Siddiqui & Sameena Zehra & Sadia Majeed & Muhammad Sabihuddin Butt, 2008. "Export-Led Growth Hypothesis in Pakistan: A Reinvestigation Using the Bounds Test," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 13(2), pages 59-80, Jul-Dec.
    12. Dani Rodrik, 1993. "Trade and Industrial Policy Reform in Developing Countries: A Review of Recent Theory and Evidence," NBER Working Papers 4417, National Bureau of Economic Research, Inc.
    13. Manasan, Rosario G., 1990. "A Review of Fiscal Incentives for Exports in the Philippines," Philippine Journal of Development JPD 1990 Vol. XVII No. 2-, Philippine Institute for Development Studies.
    14. Pushpa Trivedi & Narayan Chandra Pradhan, 2010. "Exports and Growth Nexus in India: An Econometric Analysis," Millennial Asia, , vol. 1(1), pages 97-121, January.
    15. Amelia U. Santos‐Paulino, 2005. "Trade Liberalisation and Economic Performance: Theory and Evidence for Developing Countries," The World Economy, Wiley Blackwell, vol. 28(6), pages 783-821, June.
    16. Naqvi, Syed Nawab Haider, 1996. "The significance of development economics," World Development, Elsevier, vol. 24(6), pages 975-987, June.
    17. Bruce Morley & Wyn Morgan, 2008. "Causality between Exports, Productivity and Financial Support in European Union Agriculture," Regional Studies, Taylor & Francis Journals, vol. 42(2), pages 189-198.
    18. Mohammad Afzal & Ijaz Hussain, 2010. "Export-Led Growth Hypothesis: Evidence from Pakistan," Journal of Quantitative Economics, The Indian Econometric Society, vol. 8(1), pages 130-147, January.
    19. Ramona Dumitriu & Razvan Stefanescu, 2015. "The Relationship Between Romanian Exports And Economic Growth After The Adhesion To European Union," Risk in Contemporary Economy, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, pages 17-26.
    20. Onafowora, Olugbenga A. & Owoye, Oluwole, 1998. "Can Trade Liberalization Stimulate Economic Growth in Africa?," World Development, Elsevier, vol. 26(3), pages 497-506, March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:2038. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.