Export Oriented Growth and Poverty Alleviation: Understanding the effects of aid, economic policy and liberalization reforms on the African economy

This thesis investigates factors that can affect export oriented growth and reduce poverty in some African countries. The reason for this is that if exports usher in a period of mild prosperity and effective and consistent economic policy implemented through institutions which is capable of improving life expectancy in developing countries are given adequate attention, this can have a positive impact on the general economic outlook of many of these developing countries. Aid-trade dynamics is studied extensively in the first paper in the thesis, and it was found that aid has the capacity to increase exporting in the African countries in our sample. The theory relied on is that aid which is initially altruistic allows for the development of a close connection between developing countries and developed donor countries, which eventually leads to trade. Secondly certain types of aid were particularly useful in promoting exports. These included aid to sectors that are likely to boost trade, these sectors are the educational, banking and financial services, agricultural and infrastructural and services sectors. Donors who pay attention to promoting good economic policies and institutional quality are likely to have aid improve trade in a more significant manner since weak policies and institutions can reduce aid effectiveness, while the presence of natural resources affects aid effectiveness in promoting trade negatively. The relationship between economic policy and life expectancy in some African countries is studied in the second paper. An index for economic policy was developed using two methods (i.e. principal component analysis and regression component analysis previously used by Burnside and Dollar). The results in the second paper show that economic policy has a negative effect on life expectancy. However after interacting economic policy with institutions, this interactive variable had a positive effect on life expectancy. The implications of this result are that implementing economic policy through institutions is likely to improve economic policy effectiveness in improving life expectancy. Improving life expectancy also means that poverty in general can be reduced in an effective manner in many developing countries through effective economic policy, therefore sound and consistent economic policy is a likely factor that has the capability of reducing poverty in developing countries. The third paper in this thesis studies the impact of economic liberalization reforms on exports in some African countries from the early 1980s when such reforms began. This paper also explores the effect of growth strategies such as trade openness policy and technology transfer policies on exports in general. The results show that economic liberalization has probably been promoting exporting, while countries that implemented the policy of trade openness are likely to have such growth strategies promote exports but the effect of their liberalization reforms on exporting were significantly weaker than those that pursued the policy to transfer technology through training human capital. The implication of these results is that implementing the strategy of opening up ones domestic economic in return for exports concession slots is likely to promote exporting on the short run but do not make liberalization reforms very successful. While countries that pursue the policy of allowing the influx of foreign enterprises on the condition of hiring, training its indigenous manpower and sharing technical know are likely to have economic liberalization reforms have a more effective effect on exports even though manpower training has little or no effect on exports on the short run.