CAPITAL INFLOWS AND INDUSTRIAL OUTPUT: THE ROLE OF TRADE OPENNESS IN SUB-SAHARAN AFRICA
Amaka Gladys Eje-Ojeka, Ambrose Attah Diemsan, Ilemona Adofu and Obadiah Jonathan Gimba
Volume 9 Issue 3
Abstract
he study investigates the effect of Capital inflows together with trade openness on Industrial output in Sub-Sahara African countries. This was done to test the Interactive technique called the modernization hypothesis in SubSahara African countries. The study used secondary data spanning from 2002 to 2021 sourced from the World Development Indicators, and Fully Modified Ordinary Least Square (FMOLS) was employed to analyze the data. The Principal Components Analysis (PCA) technique was used to generate a single index that gives the measures of Capital inflows and Trade Openness. The empirical result showed that Trade openness and Active Labour have a positive and significance relationship with Industrial Output, Capital Inflows have positive but insignificance effect on Industrial Output. Similarly, when Trade Openness was interacted with Capital inflows, the result revealed a positive but non-significant effect on Industrial Output. And Institutional Adequacy has an inverse and significant effect on Industrial output. The study therefore concludes that, Trade Openness policy together with Inflows of capital enhances the effectiveness of industrial Output in Sub-Sahara African countries. Keywords: Industrial Output, Trade Openness, Interactive model, FMOLS.
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