Contents of the volume

2018, Volume 71 - Issue 4

ISSN: 2499-8265
RSS feed citation: At RePEc
Publication date: 07 November 2018


Malefa Rose Malefane, Nicholas M. Odhiambo

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Clement Zibusiso Moyo, Hlalefang Khobai

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Olabode E. Olabisi, Evan Lau

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Oluremi Ogun

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Garikai Makuyana, Nicholas M. Odhiambo

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Genoa Chamber of Commerce
Economia Internazionale / International Economics

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Corresponding author

Olabode E. OLABISI, Department of Economics, Elizade University, Ilara-Mokin Ondo State, Nigeria


Evan LAU, Faculty of Economics and Business, Universiti Malaysia Sarawak (UNIMAS), Malaysia

Causality Testing between Trade Openness, Foreign Direct Investment and Economic Growth: Fresh Evidence from Sub-Saharan African Countries




Previous works are yet to reach a consensus about the direction of causality between Trade Openness (TO), Foreign Direct Investment (FDI) and Economic Growth (EG), in particular, using a panel data analysis for Sub-Saharan African (SSA) countries. This study adopts first and second generation econometric methods to analyse the relationships between trade openness, FDI and economic growth in Sub-Saharan Africa countries over the period 1980-2016. The Westerlund cointegration, the Common Correlated Effect Mean Group (CCEMG), and the  Bootstrapp Granger causality econometric techniques were adopted. Findings show there is a cross-sectional dependence among the 23 SSA countries examined. A long-run cointegration among trade openness, FDI and economic growth also exists. A positive and significant relationship exists between trade openness and economic growth. FDI indicates a positive and significant relationship with economic growth. The panel error correction term (ECT) result further confirmed the long-run relationship among the variables. A bidirectional causal relationship exists among trade openness, foreign direct investment net inflows and economic growth for Gambia, Senegal and South African countries. As part of our policy recommendations, SSA government should promote trade openness by reducing or eliminating trade tariff and non-tariffs that can limit the economic activities in the region

JEL classification

F14, F43, O49, O55


FDI, Real GDP per capita, Pooled Mean Group, Trade Openness


  1. Introduction
  2. Review of some relevant literature
  3. Data and estimation technology
  4. Empirical results
  5. Conclusion and policy implications


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