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Title: THE POVERTY IMPLICATION OF TRADE LIBERALISATION IN SUB-SAHARAN AFRICA REGION: A DYNAMIC PANEL GENERAL METHOD OF MOMENTS ANALYSIS
Authors: JALI, BEKELE
Advisors: Dr. Girma Estiphanos
Copyright: May-2011
Date Added: 26-Jun-2012
Publisher: AAU
Abstract: This thesis examines the poverty implication of trade liberalisation through its potential nexus with overall income growth and distribution. Combining results from OLS and Dynamic Panel GMM techniques due to Arellano-Bond (1991) and Blundell-Bond (1998) employed, some evidence is found from recent data that trade liberalisation is poverty reducing in SSA. Specifically, the OLS results show that the distributional consequences of trade liberalsiation are small and not significantly different from zero. However, openness to trade contributes to higher inequality in the region’s resource rich countries. Additional results obtained from the same regression include that the poor’s income is closely related with overall average income with an elasticity coefficient of around 0.8, and inflation is related with higher inequality. Thus, although the poor’s income is closely related with overall income growth, income inequality will be rising over time which could be compounded by inflation. After accounting for most of the factors relevant in determining income growth, the growth impact of trade liberalisation was also examined. The principal finding in this is that trade liberalisation in SSA positively affects income growth. Combined, the findings suggest that trade liberalisation must have played a role in the recent decline in the region’s poverty through its relation with income growth. Besides, although the structure of production in African economies is positive but not statistically different from zero, its significance could be disguised by the continued commodity demand boom African economies currently enjoy. However, the current policy on trade in SSA may not be adequate. First, openness in resource rich countries in region is associated with increasing income inequality. Secondly, the poor’s income is less than unitary elastic to overall income changes that income inequality in the region will be increasing with growth overtime. Thus, complementary measures to tackle the growing tendency for inequality overtime and encouraging other growth drivers may be necessary.
Description: A THESIS SUBMITTED TO THE SCHOOL OF GRADUATE STUDIES OF ADDIS ABABA UNIVERSITY IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF SCIENCE IN ECONOMICS
URI: http://hdl.handle.net/123456789/3212
Appears in:Thesis - Economics

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