TRADE AND POVERTY REDUCTION IN AFRICA

Mauritius - 19 September 2018

Trade has been identified as an important factor contributing to poverty reduction in many countries. This study uses a panel Vector Autoregressive framework, both in the long run and the short run to analyse the relationship between trade openness and poverty reduction for the case of Africa. The long run results show that trade is a strong conributor to poverty alleviation as it allows people to exploit their productive potential, assists economic growth, curtails policy interventions and helps to insulate against shocks. In the short run, trade openness has a small but negative and significant impact on poverty reduction suggesting that trade openness takes time to have its full effect on the level of poverty.  

Author(s): Fauzel, Seetanah and Sannassee

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