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Who in the World can Africa Catch-up to? Evidence from Income Convergence Analysis

Author

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  • MATONANA, NTOMBIYESIBINI

    (Department of Economics, Faculty of Business and Economic Studies, Nelson Mandela University, Port Elizabeth, South Africa)

  • PHIRI, ANDREW

    (Department of Economics, Faculty of Business and Economic Studies, Nelson Mandela University, Port Elizabeth, South Africa)

Abstract

This study investigates the convergence hypothesis in African countries motivated by the increasing interest to measure disparities in establishing an economic union. The objective of this study is to provide an analysis of convergence in Africa by looking at the African Continental Free Trade Agreement (AfCFTA) against 6 of its top trading partner groups, APTA, NAFTA, MERCOSUR, ASEAN, EU, and G20. This study seeks to establish whether Africa converges toward the growth rates of its more developed trading partners. The data sample spans from 1971-2020. The method of analysis employed in this study is the Fractional Frequency Flexible Fourier Function (FFFFF) unit root tests to account for different forms of nonlinearities and unobserved structural breaks. The preliminary analysis using linear and nonlinear unit root tests reveals inconclusive results, with convergence being found for the African continent as a whole and not for sub-groups. However, in applying the more powerful FFFFF, we find more consistent results indicating convergence both at the continental and regional levels. We, therefore, conclude that Africa exhibits strong catch-up effects towards its major trading partners, and the AfCFTA should focus on strengthening economic ties with international trading blocs. Con chi può stare al passo l’Africa? Evidenze da un’analisi convergente del reddito Questo articolo esamina l’ipotesi di convergenza nei paesi africani motivata dal crescente interesse verso la misurazione delle disparità nello stabilire un’unione economica. Il fine è quello di fornire un’analisi di convergenza in Africa tramite il confronto dell’accordo AfCFTA con i primi suoi sei partner commerciali: APTA, NAFTA, MERCOSUR, ASEAN, EU e G20. Questo articolo tenta di stabilire se l’Africa tende verso i tassi di crescita dei suoi partner commerciali maggiormente sviluppati. Il campione copre il periodo 1971-2020. Il metodo di analisi impiegato è il test di integrazione Fractional Frequency Flexible Fourier Function (FFFFF), test che permette di considerare forme differenti di non-linearità e break strutturali non notati. L’analisi preliminare tramite l’uso di test a radice unitaria lineare e non-lineare mostra risultati inconclusivi, essendo la convergenza trovata riferita all’Africa come continente e non ai sotto-gruppi di paesi. Applicando il test FFFFF, invece, troviamo risultati più consistenti che indicano convergenza sia a livello continentale che regionale. Pertanto, si evince che l’Africa converge verso i suoi maggiori partner commerciali e che l’AfCFTA dovrebbe concentrarsi sul rafforzamento degli accordi commerciali con i blocchi internazionali.

Suggested Citation

  • Matonana, Ntombiyesibini & Phiri, Andrew, 2024. "Who in the World can Africa Catch-up to? Evidence from Income Convergence Analysis," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 77(3), pages 417-444.
    • Handle: RePEc:ris:ecoint:0977
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    References listed on IDEAS

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    More about this item

    Keywords

    Convergence; African Continental Free Trade Agreement (AfCFTA); Economic Growth; Fractional Frequency Flexible Fourier Function (FFFFF) Unit Root Test; Asymmetries; Unobserved Structural Breaks;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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