Trade openness and human development: empirical evidence from sub-Saharan Africa

The study analyses the role of trade openness in enhancing human development across Sub-Saharan Africa. The experience of Sub-Saharan region shows that, despite various adjustments held in trade policies with the long run objective of enhancing people’s living standard, the level of human development has consistently been lower for the region as whole and unbalanced within, especially between resource rich countries, resource scarce-coastal countries and resource scarce-landlocked countries. The study aims to examine the nature of trade and human development relationship across all these countries within the region. Moreover, it intends to examine the effects of trade openness to non-income components of human development. The hypotheses are, trade affects human development positively in resource rich and resource scarce-coastal countries and it has no impact to resource scarce-landlocked countries. Furthermore, it is expected that openness has no impact on non-income components of human development. Using GMM estimation technique, the study has found that, as countries are more open to international trade, it enhances their domestic welfare particularly in resource rich countries and resource scarce-coastal countries. Furthermore, it is vivid that trade has no significant influence on non-income components of human development despite the observed strong economic growth. These imply that, domestic policies are not well structured to extend the trade payoffs in support of growth to other sectors. It also implies that, resource rich countries and resource scarce-coastal countries have many potentials to enhance their population living standard through trade openness while resource scarce-countries are called to co-operate with its neighbours through regional integrations in order to benefit from intra-continental trade that focuses on product complementariness and the interests of neighbours.