Services trade and infrastructure development: Evidence from African countries

Using a dynamic system GMM estimate, this study analyzed the impact of services trade on the development of infrastructure in 38 African countries over the period 2000-2020. Telecommunications, trade/transport-related, and port infrastructures were modelled as the dependent variables on services tra...

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Bibliographic Details
Published in:Cogent economics & finance 2022-12, Vol.10 (1), p.1-21
Main Authors: Ibrahim, Kabiru Hannafi, Wasiaturrahma, Wasiaturrahma
Format: Article
Language:English
Subjects:
African countries
Capital formation
dynamic system GMM
External debt
F10
Foreign exchange rates
GDP
Gross Domestic Product
H54
Infrastructure
infrastructure development
Openness
Population density
Services trade
Telecommunications
Transportation
Urbanization
Value
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Summary:Using a dynamic system GMM estimate, this study analyzed the impact of services trade on the development of infrastructure in 38 African countries over the period 2000-2020. Telecommunications, trade/transport-related, and port infrastructures were modelled as the dependent variables on services trade openness. Other sets of control variables include real GDP, financial development, gross fixed capital formation, external debt, population density, urbanization, exchange rate, and services value-added. Our empirical strategy revealed that regardless of the infrastructure indicator used in the estimate, services trade, GDP, financial development, external debt, and services value-added significantly promote the development of infrastructure in the continent. Capital formation increases trade/transport-related and reduces port infrastructure while population density increases trade/transport-related and port infrastructure. The finding further indicates that urbanization increases telecommunications and reduces trade/transport-related infrastructure. The exchange rate reduces the development of telecommunications and port infrastructure. The findings are therefore vital to present policies related to services trade and infrastructure development in African countries.
ISSN:2332-2039
2332-2039
DOI:10.1080/23322039.2022.2143147