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Threshold Effect of Raw Material Prices on Economic Growth of African Countries

Threshold Effect of Raw Material Prices on Economic Growth of African Countries We study the nonlinear effects of raw material prices measured by that of cotton product on the economic growth of a sample of African countries for the period of 1991–2019. Using the procedure for determining endogenous thresholds (Hansen, 1999) [Threshold effects in non-dynamic panels: Estimation, testing, and inference. Journal of Econometrics, 93, 345–368], the study revealed that raw material prices positively affect economic growth when the prices reach a threshold above 96.1. These results indicate that to be effective, any economic policy measure aimed at accelerating the economic growth of these commodity-dependent countries must take into account the level of raw material price indices, the quality of governance, and the level of financial development. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of International Commerce, Economics and Policy World Scientific Publishing Company

Threshold Effect of Raw Material Prices on Economic Growth of African Countries

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Publisher
World Scientific Publishing Company
ISSN
1793-9933
eISSN
1793-9941
DOI
10.1142/S1793993321500095
Publisher site
See Article on Publisher Site

Abstract

We study the nonlinear effects of raw material prices measured by that of cotton product on the economic growth of a sample of African countries for the period of 1991–2019. Using the procedure for determining endogenous thresholds (Hansen, 1999) [Threshold effects in non-dynamic panels: Estimation, testing, and inference. Journal of Econometrics, 93, 345–368], the study revealed that raw material prices positively affect economic growth when the prices reach a threshold above 96.1. These results indicate that to be effective, any economic policy measure aimed at accelerating the economic growth of these commodity-dependent countries must take into account the level of raw material price indices, the quality of governance, and the level of financial development.

Journal

Journal of International Commerce, Economics and PolicyWorld Scientific Publishing Company

Published: Jun 27, 2021

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