Title: Effect of trade shock on inequality, unemployment and inflation in Sub-Saharan Africa

Authors: Chinwe Okoyeuzu; Ebere Ume Kalu; Angela Ukemenam; Augustine Ujunwa

Addresses: University of Nigeria, Enugu Campus, Nsukka, Nigeria ' University of Nigeria, Enugu Campus, Nsukka, Nigeria ' University of Nigeria, Enugu Campus, Nsukka, Nigeria ' West African Monetary Institute, Gulf House, Tetteh Quarshie Interchange, PMB CT 75, Accra, Ghana

Abstract: We studied the impact of trade shocks on inequality, unemployment and inflation in 35-Sub-Saharan African countries from 1997 to 2018. Using the VECM framework, we confirm a strong correlation among trade, inequality, unemployment and inflation, and find that adverse shock from trade promotes inequality, unemployment and inflation in Sub-Saharan African countries. This implies that the gains from trade are elusive in Sub-Saharan Africa, and the channels of the negative shocks could be imports surge relative to exports; job loss by workers in sectors with greater initial exposure to export surge; imported inflation and labour immobility between trade partners. Based on the findings, the study recommends that Sub-Saharan African countries need to rethink their trade engagement, in terms of restructuring their economies and strategic engagement with trade partners to optimise the gains of trade.

Keywords: trade shocks; inequality; competitiveness problem; VECM; cointegration.

DOI: 10.1504/IJBG.2023.129539

International Journal of Business and Globalisation, 2023 Vol.33 No.4, pp.514 - 529

Received: 19 Oct 2019
Accepted: 02 Jan 2020
Published online: 14 Mar 2023 *

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