Agricultural Imports, Agriculture Productivity and Economic Growth in sub-Saharan Africa: A Bootstrap Granger Noncausality Analysis in Heterogeneous Panels

Abstract

This study investigates the causal links among agricultural imports, agriculture productivity, and economic growth in 40 sub-Saharan African countries over the period 1990–2015. Granger noncausality tests are applied to infer direction of causality, whereas the generalized two-stage least squares instrumental variable technique estimates the effects while controlling for endogeneity. The bootstrapping procedure is used to deal with cross-sectional dependence. The results reveal bidirectional causality between agricultural imports and agriculture productivity in the full sample, and in middle- and low-income non-oil-exporting countries. The relationship between agricultural imported inputs and agriculture productivity is positive and significant. In addition, unidirectional causality from agricultural imports to economic growth is seen in the full sample and middle-income non-oil exporters. Growth elasticity of agricultural imports is about 0.98 in the full sample and about 1.3 in the middle-income group. Therefore, agricultural trade policies in the region should be reexamined to promote international trade for economic development