Infrastructural development and trade performance in Sub-Saharan African countries

Abstract

This study investigates the impacts of infrastructural development on trade performance in 30 sub-Saharan African economies using panel data from 2000 to 2020. The study employs the Generalized Method of Moments (GMM) dynamic pooling estimator and Dumitrescu–Hurlin (DH) panel causality tests. The empirical evidence suggests that both transport and ICT infrastructure have significant and positive effects on trade performance in sub-Saharan African countries. It has been found that trade performance is not significantly impacted by the relationship between economic growth and infrastructure development. This underscores the slow pace of economic growth in the region. The Dumitrescu–Hurlin (DH) panel causality tests establish evidence of unidirectional causality from each proxy of infrastructural development to trade performance and not vice versa. The study concludes that the sub-Saharan African government must purposefully invest in infrastructural development as a means to improve trade activity in the region. It is imperative to actively seek effective policies and a favourable macro environment to promote the necessary economic growth in order to fully realise the advantages and incentives of infrastructure investments.