Has Economic Growth of China and India Impacted African Economic Prosperity?
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Has Economic Growth of China and India Impacted African Economic Prosperity? Azmat Gani 1 & Nisar Ahmad 1
# International Atlantic Economic Society 2020
Abstract This paper investigates whether the economic growth of China and India matters for the long-term economic prosperity of African nations. Annual World Bank data were used to determine the growth of African countries for the period from 2002 to 2016. The analytical framework includes the standard Barro growth regression model. The Arellano and Bond generalised method of moments estimation procedure was used to analyse the data, overcoming the issues of autocorrelation, heteroscedasticity and endogeneity. The findings based on the generalised method of moments estimation indicate that the economic growth of China, but not of India, had a statistically significant (p = 0.10) positive correlation with the economic growth of Africa. It is concluded that the economic growth of China assumed a significant decisive role in supporting African economic prosperity. Hence, Africa is likely to realise long-term beneficial growth and development effects by actively integrating with large economies, such as China. Keywords Growth . China . India . Sub-Saharan Africa JEL Codes O40 . O50
Introduction The 48 countries in the Sub-Saharan African subcontinent are home to some 14% of the world’s population. Africa, with its vast natural resources and a growing and an aspiring youth population, faces significant challenges in meeting several long-run goals of economic prosperity, including the 2015 United Nations Sustainable
* Azmat Gani [email protected]
1
Department of Economics and Finance, College of Economics and Political Science, P.O. Box 20. Al Khod, 123 Muscat, Oman
Gani A., Ahmad N.
Development Goals (United Nations 2015, p.14). However, notable positive signs on several fronts, including economy-wide reforms, are emerging out of Africa that tend to indicate more substantial opportunities of doing business and better growth prospects for the continent that are likely to generate more excellent business connections with other nations. One example of the connectivity that already exists is the commercial presence of China and India, two of the world’s largest developing economies that are likely to intensify as Africa progresses with its business and economic reforms. Several years of economic progress experienced by China and India have driven these two economic powers to seek opportunities for raw materials, resources and business ventures in Africa (Asongu and Ssozi 2016). China and India’s continuous commercial presence in Africa provides strong motivation to investigate whether the economic growth of China and India matters for the economic prosperity of African countries. In doing so, annual data for the period from 2002 to 2016 were used from a large sample of African countries in the Barro (1990) growth modelling framework. The generalized method of moments (GMM) was utilized to determine the growth impact of China and India while controlling for several
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