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Trade balance and economic growth: evidence from African countries

Author

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  • Clement Moyo
  • Rufaro Garidzirai

Abstract

Does the trade balance influence economic growth? This question has sparked several views among academics. To contribute to this debate, the study employed the generalised methods of moments, feasible generalised least squares (FGLS) and panel granger non-causality test, to investigate the relationship between the trade balance and economic growth in African countries. The results of the study show that the trade balance is positively related to economic growth. Furthermore, the results also suggests that economic growth is a determinant of the trade balance. The authors recommend that African countries diversify their product structures and improve the competitiveness of their products to reduce imports of consumer goods which can be produced locally. Furthermore, imports should comprise mostly of intermediate inputs to enhance productive capacity. The study also supports the creation of trading blocs such as the African Continental Free Trade Area (AfCFTA), which will enlarge and diversify export markets, thus improving trade balances.

Suggested Citation

  • Clement Moyo & Rufaro Garidzirai, 2022. "Trade balance and economic growth: evidence from African countries," International Journal of Trade and Global Markets, Inderscience Enterprises Ltd, vol. 15(4), pages 497-515.
    • Handle: RePEc:ids:ijtrgm:v:15:y:2022:i:4:p:497-515
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    Cited by:

    1. Liurong Pan & Asad Amin & Nian Zhu & Abbas Ali Chandio & Eric Yaw Naminse & Aadil Hameed Shah, 2022. "Exploring the Asymmetrical Influence of Economic Growth, Oil Price, Consumer Price Index and Industrial Production on the Trade Deficit in China," Sustainability, MDPI, vol. 14(23), pages 1-22, November.

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