The moderating effect of education on the Trade – Poverty nexus. A dynamic analysis for Africa.

The trade and poverty nexus has been extensively studied but the findings remain mixed and are very often sensitive to modelling choices and different data sources. A critical gap in this area is the limited research done on the moderating role of education on this relationship for the African continent. Hence, the study addresses this shortcoming and uses a panel autoregressive distributed lag model (PARDL) to examine how education enhances the trade-poverty nexus. The results confirm the complementarity of trade and education in the quest for reducing poverty in both the long run and short run. There is also support for the importance of economic growth in reducing poverty and similar results were obtained for government spending which reduces poverty levels. Additionally, the Dumitrescu Hurlin Causality test shows a unidirectional causality from trade openness to poverty reduction. Hence, policymakers should emphasise educational reform and implement skill development initiatives to complement trade liberalisation policies in order to ensure reduction in poverty.