Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/52757 
Year of Publication: 
2002
Series/Report no.: 
WIDER Discussion Paper No. 2002/91
Publisher: 
The United Nations University World Institute for Development Economics Research (UNU-WIDER), Helsinki
Abstract: 
Using panel data, this paper explores the effects of openness to international trade and foreign direct investment (FDI) on economic growth. Fixed-effect and adjusted fixedeffect (regional-effect) estimations yield results consistent with the hypothesis of conditional convergence. FDI has a significant positive impact on economic growth in all specifications. However, openness to trade does not seem to enhance growth in poor countries. The empirical findings fail to substantiate the proposition that greater openness facilitates convergence to higher income levels. On the contrary, there is evidence that greater openness to international trade promotes economic growth primarily in higher-income African countries, implying that threshold effects may be crucial to the effectiveness of openness. Furthermore, the results from the adjusted fixed-effect estimation appear to validate the claim of convergence clubs within Africa. – Africa ; conditional convergence ; convergence clubs ; economic growth ; Globalization ; openness ; trade ; panel estimation
JEL: 
C23
F43
O24
O55
ISBN: 
9291903078
Document Type: 
Working Paper

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