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The African Growth and Opportunity Act and growth in sub‐Saharan Africa: A local projection approach

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  • Nathaniel P. S. Cook
  • Jason C. Jones

Abstract

The African Growth and Opportunity Act (AGOA) is intended to increase exports and economic growth in sub‐Saharan Africa by providing trade preferences to eligible countries. While previous research has generally found a positive relationship between AGOA and exports, no previous research has investigated the relationship between AGOA and economic growth. We explore the dynamic relationship between AGOA and economic growth in sub‐Saharan Africa by applying the local projection method (American Economic Review, 95, 2005 and 161) to estimate impulse responses. We find that a country's becoming eligible for AGOA preferences is associated with higher growth rates in the future, but that this effect may not be immediate, highlighting the importance of exploring the dynamic relationship between AGOA and growth.

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  • Nathaniel P. S. Cook & Jason C. Jones, 2021. "The African Growth and Opportunity Act and growth in sub‐Saharan Africa: A local projection approach," The World Economy, Wiley Blackwell, vol. 44(1), pages 234-261, January.
    • Handle: RePEc:bla:worlde:v:44:y:2021:i:1:p:234-261
    DOI: 10.1111/twec.12995
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