This study investigates the effect of exports on income inequality in sub-Saharan Africa (SSA). While trade is often regarded as a catalyst for growth, SSA’s heavy reliance on primary commodity exports has raised concerns about its role in perpetuating income disparities. The research aims to provide empirical evidence on whether exports reduce or exacerbate inequality in the region.
The study employs panel data covering 39 SSA countries between 2010 and 2018, drawing on data from the World Bank, The United Nations Development Programme (UNDP) and United Nations Conference on Trade and Development (UNCTAD). Both static (fixed and random effects) and dynamic (system-GMM) panel estimation techniques are applied to address issues of endogeneity, serial correlation and heteroscedasticity. Inequality is measured using the Gini coefficient and the adjusted Atkinson index, while explanatory variables include export and import openness, Foreign Direct Investment (FDI), government spending, human development and employment levels.
Results reveal strong level of persistence of inequality across SSA, with exports found to significantly increase income disparities. Export dependence dominated by capital-intensive and resource-driven sectors such as oil and minerals aggravates inequality by concentrating revenues among elites. Conversely, imports generally reduce inequality by promoting efficiency and broadening access to goods. Other findings show that foreign direct investment and government spending often worsen inequality, while human development and employment contribute modestly to reducing disparities.
This study contributes to the literature by (1) applying a dynamic system-GMM framework to address endogeneity and persistence in inequality, (2) employing Purchasing Power Parity (PPP)-adjusted trade openness measures alongside dual inequality indices and (3) providing SSA-specific evidence linking export structure (commodity dependence) to inequality outcomes.
