Threshold Effects and Growth-Openness Nexus in Sub-Saharan Africa

This study examines the growth effects of openness under the consideration that openness, though a growth variable may well be a threshold variable in Sub-Saharan Africa for the period 1970-2008. By using the threshold econometric analysis, it turns out that this is the case. In particular, it is found that openness serves to stratify the region into small open and highly open economies with the growth effects being higher in the former than in the latter countries. The study concludes that openness to trade may be harmful to some countries in the region while it may be helpful to others and that it will be a damning policy recommendation to treat this bi-modal group of countries as a homogenous entity as often presumed in the policy circles.