Trade and Industrialization : a panel data model for economic growth in North Africa

Abstract EN

The present paper examines the role of trade as an engine for economic growth in an analytical framework that focuses essentially on industrialization strategy.

Two main trade strategies were examined import substitution versus export promotion strategies, the study investigates the impact of trade and industrialization on economic growth based on experience of North Africa region.

The main policy recommendation is to establish North Africa Economic Community (NAEC) to enhance trade and economic growth.

The central thesis of the present paper is to highlight the experience of two regions; the experience of trade and industrialization in Asian Tigers compared to North Africa Region.

The paper identifies the process of industrialization and economic growth as supported by import substitution industrialization strategy (ISIs) in the first phase and an export led growth or export promotion (EP) in the second phase, hence after, the main factors explaining trade and growth were identified, the ultimate objective is to build a practical framework for trade and industrialization policies as a roadmap for economic development.

The results had shown a positive and strong relationship between trade balance, (GDP) growth and (FDI) flows and negative relationship with population growth and inflation, this implies that macroeconomic stability is crucial to foreign trade, while sustaining economic growth will improve external imbalance.

The experience of Sudan as a case study is highlighted with special emphasis on how to build an effective industrialization strategy and adopt an open up policy for more economic integration with the region and the world economy.

It’s recommended to emphasize more efforts on macroeconomic policies to maintain economic stability and create a conducive environment for attracting foreign direct investment and avail resources to boost industrial growth.

In order to enhance economic integration in North Africa there is a need to establish North Africa Economic Community (NAEC) following the necessary steps for creating a free trade area, monetary union and a common market for North Africa.

It is important to adopt specific stages for industrial development in each country by considering real economic challenges and identifying complementarity between agriculture and industry and promoting integration between various economic sectors.