Author
Abstract
Exports in sub-Saharan Africa have struggled to generate the kind of growth witnessed in Southeast Asia on the background of rising government debt. This article considers the extent to which government debt, which has tripled since 2008, may have constrained export-led growth in the region. Further examined is the extent to which debt reduction is possible through revenue growth and expenditure cuts. From a sample of 44 sub-Saharan countries observed between 2004 and 2023, the impact of exports on economic growth is found to be stronger in countries with low to moderate levels of debt and weaker in countries with high debt. To achieve robust economic growth from exports, sub-Saharan countries need to keep debt below 45% of GDP. From the results, this requires cutting expenditure on GDP by 2–10 percentage points or raising revenue (excluding grants) by 2–12 percentage points. These estimates are in line with the primary balance adjustment of at least 2 percentage points recommended by the IMF. Estimates further indicate that cutting government expenditure reduces debt more than raising revenue. Counterfactual scenarios show that cutting government expenditure on GDP by 15 percentage points would reduce government debt from 55 to 45% of GDP.This paper addresses the question of why trade has hardly accelerated growth in sub-Saharan Africa and the importance of managing government debt as a moderating factor. The empirical evidence from a panel of 44 countries demonstrates the importance of prudent fiscal policies and debt management strategies as the growth effect of exports is constrained by high government debt. This evidence is consistent with the IMF’s policy stance on the need for urgent debt management strategies in the sub-Saharan region.
Suggested Citation
Brian Tavonga Mazorodze, 2024.
"Exports, government debt and economic growth in sub-Saharan Africa,"
Cogent Economics & Finance, Taylor & Francis Journals, vol. 12(1), pages 2426534-242, December.
Handle:
RePEc:taf:oaefxx:v:12:y:2024:i:1:p:2426534
DOI: 10.1080/23322039.2024.2426534
Download full text from publisher
As the access to this document is restricted, you may want to search for a different version of it.
Corrections
All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:oaefxx:v:12:y:2024:i:1:p:2426534. See general information about how to correct material in RePEc.
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
We have no bibliographic references for this item. You can help adding them by using this form .
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/OAEF20 .
Please note that corrections may take a couple of weeks to filter through
the various RePEc services.