Impact of Economic Globalization on Human Development in Sub-Saharan African: A Dynamic Panel Data Analysis
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Date
2011-06
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Addis Ababa University
Abstract
Participation in the existed global economic integration is an inevitable process because
it brings additional positive force for the acceleration of economic growth, and ensuring
sustainable development, particularly for resource-scarce developing countries like Sub-
Saharan Africa., But there will be a need to regulate the level and value of the integration
to maximize the benefits and reduce the costs associated with it.
The debate about economic development has taken on a new turn since recent years and
start thinking beyond per capita gross national product as the measure of a country’s
development performance, instead the human development index challenged purely
economic measures of national achievement and helped lay the conceptual foundation for
the UN's MDGs, calling for consistent global tracking of progress in health, education
and overall living standards. To this effect, using a panel data on 39 Sub-Saharan
African countries from 1990 to 2009, this study explores the potential contribution of
economic globalization for the achievement of human development in SSA. The study uses
HDI as a dependent variable and the inflow of investment, GDP Per Capita and trade
openness as independent variables. To test the sensitivity of the results, I employ the
dynamic panel data method based on System GMM to verify findings.
The estimation result suggests that both greater GDP Per Capita and the inflow of foreign
investment are positively and significantly contribute to the growth of human development
index and then to the progress of those human development components of MDGs. But,
the study also confirms outward trade policy has no a direct impact in country’s effort to
improve the welfare development of their nation in the region. Moreover, the study
recommends SSA countries should focus on domestic and foreign investment policies that
encourage job creation, skill and technology transfers, strengthen the quality and
accessibility of both health and education sectors
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Global Economic Integration