Not all that glitters is gold: political stability and trade in Sub-Saharan Africa

Asongu, Simplice and Yapatake Kossele, Thales and Nnanna, Joseph (2021): Not all that glitters is gold: political stability and trade in Sub-Saharan Africa. Published in: Crime, Law and Social Change , Vol. 75, (March 2021): pp. 469-485.

Abstract

This study examines linkages between political stability and trade openness dynamics in a panel of 44 countries in SSA from 1996 to 2016. The empirical evidence is based on the generalized method of moments. From the findings, the negative relationship between political stability and merchandise trade is not significant while the negative relationship between political stability and trade openness (exports plus imports) is significant. Hence, the findings do not validate the tested hypothesis that political stability/no violence increases trade in the sub-region. The perspective that some forms of political stability can slow down and prevent international trade is consistent with Oslon in Rise and Decline of Nations (RADON) and recent contributions to the economic development literature which have shown that not all forms of political stability are development friendly because much depends on the extent to which stability translates into, inter alia, good governance. The principal policy implication is that standards of political governance need to be boosted in order to improve the anticipated effects of political stability on trade, especially in the light of the ambitious African Continental Free Trade Area (AfCFTA). Other policy implications are discussed.

• Item Type: MPRA Paper
• Language: English
• Keywords: Political Stability; Trade; Sub-Saharan Africa
• Subjects: F - International Economics > F5 - International Relations, National Security, and International Political Economy > F52 - National Security ; Economic Nationalism; K - Law and Economics > K4 - Legal Procedure, the Legal System, and Illegal Behavior > K42 - Illegal Behavior and the Enforcement of Law; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O17 - Formal and Informal Sectors ; Shadow Economy ; Institutional Arrangements; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O55 - Africa; P - Economic Systems > P1 - Capitalist Systems > P16 - Political Economy

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