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Corresponding Author:
Ntombiyesibini Matonana, Department of Economics, Faculty of Business and Economic Studies, Nelson Mandela University, Port Elizabeth, South Africa

Coauthors:
Andrew Phiri, Department of Economics, Faculty of Business and Economic Studies, Nelson Mandela University, Port Elizabeth, South Africa

Who in the World can Africa Catch-up to? Evidence from Income Convergence Analysis

April 6, 2023
JEL classification: C22; C51; C52; O47
Keywords: Convergence; African Continental Free Trade Agreement (AfCFTA); Economic Growth; Fractional Frequency Flexible Fourier Function (FFFFF) Unit Root Test; Asymmetries; Unobserved Structural Breaks

Abstract

This study investigates the convergence hypothesis in African countries motivated by the increasing interest to measure disparities in establishing an economic union. The objective of this study is to provide an analysis of convergence in Africa by looking at the African Continental Free Trade Agreement (AfCFTA) against 6 of its top trading partner groups, APTA, NAFTA, MERCOSUR, ASEAN, EU, and G20. This study seeks to establish whether Africa converges toward the growth rates of its more developed trading partners. The data sample spans from 1971-2020. The method of analysis employed in this study is the Fractional Frequency Flexible Fourier Function (FFFFF) unit root tests to account for different forms of nonlinearities and unobserved structural breaks. The preliminary analysis using linear and nonlinear unit root tests reveals inconclusive results, with convergence being found for the African continent as a whole and not for sub-groups. However, in applying the more powerful FFFFF, we find more consistent results indicating convergence both at the continental and regional levels. We, therefore, conclude that Africa exhibits strong catch-up effects towards its major trading partners, and the AfCFTA should focus on strengthening economic ties with international trading blocs.

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Who in the World can Africa Catch-up to? Evidence from Income Convergence Analysis

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Institute for International Economics of the Genoa Chamber of Commerce

Institute for International Economics
of the Genoa Chamber of Commerce