Does Globalisation Promote Economic Output in Sub-Saharan Africa? Evidence from Bootstrap ARDL Model

Abstract

This study aims to investigate whether globalisation promotes economic output in Sub-Saharan African countries in both the short run and the long run. Based on the latest version of the KOF globalisation index, we employ a newly developed bootstrap autoregressive distributed lag model to analyse this question. Compared to the traditional autoregressive distributed lag model, which ignores the degenerate cases, the new approach could avoid spurious cointegration. Results show that globalisation and economic output are positively correlated for most Sub-Saharan African countries, while the causal effect cannot be concluded except for a couple of exceptions. This finding implies that globalisation cannot guarantee an increase in economic output in the long run for most Sub-Saharan African countries. The Granger causality test shows that globalisation leads to economic output for Burundi, Gabon, Rwanda, Senegal and Zambia in the short run. Conversely, economic output leads to globalisation for Burkina Faso, Cameroon, Ghana, Kenya and Senegal. For Senegal, globalisation and economic output mutually determine each other and therefore form a positive spiral development path. Policymakers should be aware of the specific features of different economies in making sound globalisation policies to avoid the underlying adverse effects of global integration.