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,...

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Bibliographic Details
Published in:Journal of international commerce, economics and policy economics and policy, 2021-06, Vol.12 (2), p.2150009
Main Author: Honoré, Houngbedji Sèwanoudé
Format: Article
Language:English
Subjects:
Econometrics
Economic aspects
Economic growth
Economic policy
Endogenous
Governance
Inference
Price indexes
Prices
Prices and rates
Raw materials
Thresholds
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Summary: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.
ISSN:1793-9933
1793-9933
DOI:10.1142/S1793993321500095