Macroeconomic channels of transmission of post-pandemic recovery strategies for African economies

Abstract

The Sar-Cov-2 pandemic that began in 2019 has significantly affected the global economy and, in particular, those of African countries. This paper analyzes possible intervention channels by African states to put their economies back on a sustainable growth path once the health crisis is under control. The paper proposes workable macroeconomic channels for these countries’ recovery from post-pandemic periods by using historical data to conduct empirical analyses. The paper employs World Bank data and ILOSTAT for 54 African countries within the period 1990–2018. We use a post-Keynesian framework and the difference and system generalized method-of-moments to show that wages drive African economic dynamics in the short run. This is particularly true for Sub-Saharan African countries. In addition, foreign output, proxied by European Union output, has a positive and significant impact on Sub-Saharan African economies in the short and long run. The results highlight strategic policy measures for recovering African economies, including improving wages and deepening international economic relations, particularly with the Eurozone countries.

Keywords:

• gross domestic product
• wage
• profit
• Covid-19
• economic recovery

JEL:

• E02
• E23
• E24
• O55

PUBLIC INTEREST STATEMENT

The search for appropriate strategies by developing countries, specifically African countries, is not new. Political and military unrest, socio-economic inequalities, and lagging development are the aspects on which policymakers focus their attention. Still, beyond that, Africa is a continent in full mutation with very encouraging economic growth prospects. In this context, the Sar-Cov-2 pandemic that started in 2019 constitutes a factor that slows down the efforts made in the past few years. This research analyzes and proposes possible intervention channels for African states to put their economies back on a sustainable growth trajectory once the health crisis is under control. We show that wages drive African economic dynamics in the short run and that foreign production, represented by European Union production, has a positive and significant impact on sub-Saharan African economies in the short and long run. Our results point to strategic measures for recovering African economies, including improving wages and deepening international economic relations, particularly with eurozone countries.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Notes on contributors

Koffi Sodokin

Mr. Koffi Sodokin is an Associate Professor at the Faculty of Economics and Management of the University of Lome. He has over ten years of experience teaching and supervising MSc students. His research focuses on money, finance, macroeconomics, and microeconomics of development. Mr. Mawuli K. Couchoro is a Full Professor and the Dean of the Faculty of Economics and Management at the University of Lome. He has over 15 years of teaching and research experience and supervision of Ph.D. and MSc students. His research interests include money, finance, macroeconomics, and microeconomics of development. Mr. Kokou W. Tozo is a Postdoctoral Fellow at the Peking University’s Institute of New Structural Economics (INSE) in Beijing, China. He has over five years of experience in field research focused on African and Asian developing countries. His research area includes Development Economics, International Economics, Applied Econometrics and New Structural Economics.