International Commodity Price and Economy Growth: Panel Data Analysis in Sub-Saharan Africa

Abstract

In the theoretical literature, the relationship between primary producer commodity prices and economic change has been confirmed. Therefore, this paper examines sub-Saharan African countries’ experiences pertaining to commodity price variation. The main purpose of this article is to examine the impact of commodity price instability in sub-Saharan Africa. To do so, panel data models are used to solve the problems of unobserved variables. The results reveal that the current growth of commodity prices has a positive effect on the growth of the economy. However, the logs of the lags and logs of the leads of the commodity price have negative impacts on the growth of the economy. That means that commodity price variations will continue to harm the economies of sub-Saharan African countries.