G-Localization as a Development Model: Economic Implications for Africa
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International Journal of Applied Economics & Econometrics
Abstract
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In this paper, we investigate G-Localization thesis in which we
postulate that developing economies can achieve stable economic
growth by active participation in the global economy while exploring
the virtue of intraregional trade. We employ the augmented Solow
growth model to capture the relationship between growth rates of
the economy using trade, industrial and technology explanatory
variables in a panel of 41 selected African countries. We commence
the empirical analysis with a description of Panel Vector
Autoregression model. To assess the long-run relationship, we carried
out panel unit root tests, panel cointegration and a panel-based vector
error correction model estimation. Panel Granger causality test is
used to examine the direction of causality in a bivariate manner.
The empirical results provide clear support for the need for African
countries to look more inward while they participate in global
economy: that is they should "G-localize"
Keywords
HB Economic Theory