Is Free Trade Good for Growth in Sub-Saharan Africa?

Abstract

The debate over the determinants of growth has occupied scholars for decades. Among them, trade regime has gradually emerged, receiving a large consensus among academics. The identification of trade openness as the best way to achieve a sound and long-lasting economic growth has become the new golden-rule in development economics, with the support of the most powerful economic institutions. However, in Sub-Saharan Africa a persisting negative growth residual was registered despite a profound restructuring of trade regime imposed by World Bank and International Monetary Fund. As a result a new wave of research has blossomed focusing on Africa, attempting at finding specific motives for the absence of convergence of Sub-Saharan Africa with the rest of the world. Nonetheless, few studies have concentrated specifically on the impact of trade regime on economic performances. In spite of that, none of them have focused on the employment of tariffs as a proxy for trade regime instead employing other proxies, more complex but less direct. This study intends to fill the gap left open by using Tariffs as a proxy for trade regime. The author will investigate the problem by employing a multivariate quantitative analysis over the period 1990-2010 for a sample of 30 Sub-Saharan African. The results suggest that there is no definite evidence in favor or against the beneficial effects of free trade for the period considered, which seems to support the conclusion that trade is only part of a broader picture, so making its potential benefits depending upon contingent conditions of the host country.