Terms of Trade Deterioration and Economic Convergence in Sub-Saharan Africa

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To undertake the study of the terms of trade deterioration a north and south model has been used .in the north model, the export price of manufactured commodities has been formulated and estimated using time series econometrics. In the south model, the export price of the primary commodities have been taken in to consideration and estimated using the same techniques. Concerning the income convergence sub section, lime series econometrics method is used to estimate the absolute income convergence while .system GMMI is used to estimable the conditional income convergence. From the econometric results, the supply side f actors (which are included in the economy of each region) affect the long run prices in both regions. The income in the south also positively affects the export price of manufactured goods. Here the import-compressed economies' can agitate the problem of terms of trade deterioration. The income of the north positively affects the price of all primary products but remain insignificant for beverage and agricultural products. The interest rate is a significant variable, which affects the short run price of beverages and agricultural raw materials but insignificant affects the price of ail primary commodities except oil. When we come to the income convergence sub section the sub Saharan Africa countries are diverging From the average per capital income of developed countries (absolute income convergence). But they are converging to different per capital level (conditional income convergence). In the growth regression saving, export share and previous year investment positively affects the growth rate in SSA while Population growth, inflation and M/GDP negatively affects the growth rate in This region Openness, illiteracy rate and foreign direct investment remained poor to affect the growth rate of SSA.



Deterioration and Economic, InSub-Saharan Africa