THE IMPACT OF TRADE LIBERALIZATION ON PER CAPITA INCOME: EVIDENCE FROM SUB SAHARAN AFRICA

Trade liberalization in Sub-Saharan Africa has been implemented in the context of Structural Adjustment Program since late 1980. However, the empirical evidence on per-capita income and growth is mixed. This paper uses dynamic panel data and three indicators of trade liberalization to examine the relationship between trade liberalization and real per-capita income for Sub-Saharan African countries. The study finds that trade share has positive impact on per-capita income while tariff rates are negatively associated with per-capita income. Even if these openness indicators maintained the expected sign, they have insignificant effect on percapita income. However, the liberalization dummy variable has positive and significant effect on per-capita income and the result is consistent and robust to changes in specifications and sample sizes.