Trade and Manufacturing in Sub-Saharan Africa

Abstract

Trade and manufacturing have gained momentum in economic debates across Africa as of late. In particular, this study attempts to shed light on the impact of trade openness on manufacturing in Sub-Saharan Africa (SSA). Using a dual comparative approach made of vector auto-regression (VAR) and general method of moments (GMM) applied to 36 countries, results indicate that trade openness impedes the development of manufacturing. The negative effect of trade openness, which remains very limited in scope notwithstanding, underscores an essential feature regarding the entire manufacturing sector in SSA. Indeed, the idiosyncrasies of this sector – namely, underdevelopment, nascent industries and lack of diversification, among others − severely undermine the resilience of countries in SSA as they face heightened international competition. 

Keywords: Trade openness, Manufacturing, Sub-Sahara Africa, Vector auto regression.