The Effect of International Trade Openness on Economic Growth: A Cross Country Analysis of Sub-Saharan Africa

Sub-Saharan Africa (SSA) countries have been experiencing poor economic performance since the 1960s. The reasons given in the trade openness-economic growth nexus literature to explain the lack of desired economic growth in SSA include underdeveloped human capital, infrastructure, poor policies, adverse climatic conditions and trade protectionism. Trade liberalization to increase the degree of international trade openness was prescribed to developing countries as a policy option that could reverse the trend of retarded economic performance. SSA is among these regions of the world that were under consideration when the Washington Consensus was coined by development economists in the late 1980s. International trade openness therefore has been a key reform agenda in SSA, but limited progress has been made on accelerating the pace of economic growth. This paper empirically examines the effect of international trade openness on economic growth using panel models. Besides, the paper also examines other necessary conditions that can improve the effectiveness of international trade openness in increasing the growth of the SSA’s economy. The paper finds that international trade openness enhances economic growth in SSA. In addition, improvement of contemporaneous policies and/or sectors will serve to increase economic growth. Therefore, the paper suggests the improvement of the investment environment that can increase the generation and expansion of both domestic and foreign direct investments (FDIs) in the region. Further, enhancement of industrial and technological capacity, human, physical and financial capital will give an impetus to the contribution of international trade openness to economic growth in SSA. The paper therefore concludes that these policies if well implemented can accelerate the pace of economic growth achievement to the desired levels that can propel SSA to higher GDP per capita status in a few decades.