The Export-Led Growth Hypothesis and the Resource-Curse Scenario in 14 Oil-Producing SSA Countries: Evidence from Panel Decomposition Approach

Dada, M. A. ; Posu, S. M. A. ; Adedeji, A. O. ; Okungbowa, Osaretin Godspower ; Oguntegbe, A. A. (2021-06)


International trade theorists provide some mechanisms through which trade could be used as a driver of economic growth but nations of the world show different dispositions to these causing variations in economic growth. This study examines the role of international trade in the growth process by finding out the validity of export-led growth hypothesis (ELGH) and the existence of resource-curse scenario (RCS) in 14 oil-producing Sub-Saharan African countries following panel econometric procedure. Specifically, the study employed ANOVA and Levene F-test to test for equality of means and variances across sample. First generation panel unit root, as well as Pedroni and Kao cointegration tests were conducted to account for stationarity of each series and long run equilibrium relation among the group of variables. The panel regression model was estimated using fixed and random effect model with Hausman test used to determine the choice of appropriate model for adoption. Panel ARDL was used to account for the short run dynamics in the model of export and economic growth nexus. Pairwise Dumitrescu Hurlin Causality (PDHC) test was used to account for causality. In all, the result invalidates the export-led growth hypothesis but confirmed the existence of resource-curse scenario. While an expansive oil export trade caused a significant contraction in economic growth, an expansive non-oil export trade caused a significant expansion in economic growth in the long run. Inflation and exchange rate were found to have produced negative effect on growth both in the short run and long run. Oil export significantly caused deterioration in economic growth of these countries evidencing a resource-curse scenario. The policy implication of this finding is that both export promotion and output enhancement policies should be rigorously pursued with emphasis on the non-oil sector to boost non-oil export trade for rapid economic progress in the affected countries.