| Abstract [eng] |
IMPACT OF TRADE OPENNESS ON ECONOMIC GROWTH IN SELECTED AFRICAN COUNTRIES A-Roland Anderson MASTER THESIS GLOBAL BUSINESS AND ECONOMICS FACULTY OF ECONOMICS AND BUSINESS ADMINISTRATION VILNIUS UNIVERSITY SUMMARY 48 Pages, 8 Tables, References 33 This study examines the impact of trade openness and its influence on economic growth in selected African countries, how trade openness has been managed within the member states of Africa, and how these transactions have impacted the economies, growth, and development of these countries. This Master thesis comprises three main parts: the literature review, the review of the publication on international trade, the methodology, the empirical results, and the discussion, a conclusion, and recommendations. Literature review examines the ongoing debate on trade growth, and the openness of economies and reviews the stand of international trade and its impact on developing markets and nations. The hassle faced with market barriers by less-developed nations. Succeeding the literature review is the Methodology, paper shows the methods, models, and the structure the author deployed, and the estimation, and the data procedure implemented for the investigation are explained. Following the methodology are the empirical results and discussion of the descriptive statistics and correlations analysis. This part detail and describes the links with the variables, disclosing how openness on economic growth and its impact on the selected African countries. The aim of the thesis is to demonstrate trade influence and the explanatory variables with economic growth in the selected African countries. Country-level annual panel data were utilized for 30 countries, covering 1990-to- 2020. This study used only world development indicators (WDI) as a data source. In this study, Pooled Mean Group (PMG) estimation estimates short- and long-term effects of explanatory variables on economic growth. Furthermore, before considering the main results using PMG estimation, the study checked the stationarity of all variables to make sure no one was stationary at the second difference (I (2). Moreover, each optimal lag length is critical for dependent and independent variables was identified since the appropriation of the lag is critical while estimating key main results. The study discovered that trade openness, industrial production, foreign direct investment, and urban population have a substantial and positive impact on economic growth in the long term; however, the short-term results are also positive and significant for industrial production and urban population but did not show a positive correspondence with trade openness, foreign direct investment, and economic growth. Important policy implications are suggested for the promotion of trade in Africa. First, the thesis demonstrates a positive connection between trade openness and economic growth in the long run: but the study failed to show that same positive effect between trade openness and economic growth in the short run, therefore governments in these countries need to develop strategies to resolve the problem with trade in the short run. Second, the results confirmed the potential of industrial production, foreign direct investment, and urban population in Africa. Therefore, governments in these countries should take the responsibility to invest more in current production infrastructures so that outputs could increase thereby leading to a huge increase in industrial activities, and that could solve some of the supply/demand problems and create more jobs for the growing population on the African continent. |
