Poverty alleviation through Inclusive Growth in Africa: The dynamic capability of trade

Abstract

The African continent has experienced sustained growth since 2000, which has led to the "emergence of Africa". However, the continent also ranked second in the world in terms of income inequality, after Latin America. This has raised concerns about the inclusiveness of African growth. The inclusiveness of growth is receiving increased attention in both academic and decision-making circles, with several definitions and means of measurement being proposed, which will tend to reveal a lack of unanimity. This work is made up of two parts. The first assesses the measurement of inclusive growth and the second assesses the relationship and the role of trade in promoting inclusive growth.

For this paper, the degree of inclusiveness of African growth was calculated using the unified method of measuring inclusive growth based on 33 African countries over a period of 2000-2018. The findings show a slightly inclusive growth as a result of a rise in economic growth and a slight fall in inequality.  The inquiry concerning the function of trade as one of the fundamental supporters of growth presents two ways that commercial exchange can impact inclusive development. 1) An indirect but significant route through GDP.  2) The direct benefits of trade on every social class, without the intervention of GDP growth. The linear regression reports non-significant results, indicating the indirect relationship between GDP growth and inclusive growth. The results imply that in addition to trade, as an important contributor to inclusive growth, there are other parameters like economic policies and development interventions.