Maximizing Industrial Value Added in Sub-Saharan Africa: The Role of Trade Globalisation and Government Regulation
Year: 2024
Type: article
Abstract: This paper investigates the combined impact of trade globalisation and regulatory quality on industrial value-added in sub-Saharan African countries. A panel dynamic model with data from 41 sub-Saharan African countries covering 2001 to 2023. The panel least squares estimation technique of fixed effects was employed. An initial stylized fact shows that SSA countries mainly experience low industrial value-added, unfavourable trade balances and terms of trade, an unstable real effective exchange rate, and poor regulatory quality. Evidence from the result shows that the balance of trade and terms of trade significantly enhance industrial value-added, while regulatory quality exerts a diminishing but statistically significant influence alongside the real effective exchange rate, which was found to be negative and statistically significant. This implies that the promising role of trade globalisation could be undermined by poor regulatory quality and unstable exchange rates. Accordingly, SSA countries must continually and productively enhance local industries, especially through the importation of intermediate goods like advanced technology to aid domestic industrial production and enhance the exportation of locally produced goods to foreign markets for foreign exchange earnings.
Institutions: Rhema University, Michael Okpara University of Agriculture
Language: English
Topic: Global trade and economics
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W7216952979