Trade Liberalization in Sub-Saharan Africa strongStagnationstrong or.pdfVIP

QEH Working Paper Series - QEHWPS13 Page 1 Trade Liberalization in Sub-Saharan Africa: Stagnation or Growth? Hiranya Mukhopadhyay* This paper argues that the greater the liberalization of imports in a Sub-Saharan African country, the more significant is the decline in its rate of growth due to the recession in high income economies during the late eighties and early nineties. This could be explained by the fact that when industrial countries are suffering from recession, the terms of trade may move in favor of developing countries due to a fall in the dollar price of importables. The volume of competitive imports may not rise in this circumstance in a country that has a well designed `interventionist trade regime. March 1998 JEL Classification: E60, E63, E65 * Queen Elizabeth House, Oxford University _________________________________________________________ E-mail : hiranya.mukhopadhyay@qeh.ox.ac.uk The idea of this paper came when the author was visiting the Institute for Economic Development, Boston University as a Ford Foundation Visiting Scholar. I thank Professor Debraj Ray for his encouragement. Financial support from Ford Foundation is gratefully acknowledged. The usual disclaimer applies. QEH Working Paper Series - QEHWPS13 Page 2 1. Introduction. The contribution of a structural adjustment program can be calculated as the difference between actual performance and an estimated counterfactual scenario of what would have happened without the program, given the initial conditions in the country, the external environment facing it and policies in the period before the program was initiated. The statistical approach