Does trade openness affect manufacturing growth in EMCCA countries? A panel cointegration analysis

Takam Fongang, Guy Martial and Kamdem, Cyrille Bergaly and Litchepah Tambo, Christian (2017): Does trade openness affect manufacturing growth in EMCCA countries? A panel cointegration analysis.

Abstract

This study uses panel data covering the period from 1984 to 2014, panel cointegration as well as Dynamic Ordinary Least Square method to investigate the effect of trade openness on manufacturing growth in Economic and Monetary Community of Central Africa (EMCCA) countries. The results reveal two effects. Firstly, there is a positive and significant effect of Foreign Direct Investment and investment on manufacturing growth. Secondly, there is an ambiguous effect of trade openness on manufacturing growth. Indeed, trade openness affects either negatively the manufacturing growth or has no effect on manufacturing growth in EMCCA countries. Whatever the case, EMCCA countries should develop their manufacturing sector before fully trading with foreign countries.

• Item Type: MPRA Paper
• Language: English
• Keywords: Trade openness, Panel Cointegration, Dynamic Ordinary Least Square, Manufacturing growth, EMCCA countries
• Subjects: F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F41 - Open Economy Macroeconomics; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F43 - Economic Growth of Open Economies; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O14 - Industrialization ; Manufacturing and Service Industries ; Choice of Technology

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