Etched by war, disease and famine, Africa has long and complex history with foreign aid.
But with some of its countries now showing promising economic growth, embarking on home-grown development programs and catching the attention of international investors, it’s also a continent keen to shake off the mantle of aid dependence.
Through the lens of Africa and international trade, Dr Samuel Amare Admassu’s recently-completed PhD research is a timely series of essays that tackle the growing consensus that too much aid promotes dependency and saps local initiatives.
‘There’s now a new focus of discussion on contemporary development from economists that’s on the importance of international trade and foreign direct investment as a viable avenue for development of lower income countries.’
By investigating current topics of trade relevant to Africa, Samuel believes his research will interest both academic researchers and policy makers.
‘Africa has been largely marginalized from international trade for decades so my thesis is an interesting and important topic to both the trade and development literature,’ he says.
A former economics lecturer with the Addis Ababa University in Ethiopia, Samuel also has a master’s degree in international trade and industry experience in applied research.
He says each of the four chapters in his thesis has a different focus with each case producing novel results.
‘Most of the analyses are based on gravity model regressions using a five year interval panel dataset of 153 countries for the period 1970 to 2010. Various fixed effects are used when appropriate to address possible omitted variable bias.’
His studies revealed a number of significant findings including the strong evidence that, despite low inter-regional trade, African trade agreements are more enhancing than non-reciprocal agreements.
‘What this reveals is that Africa’s trade with the developed world is difficult in the export of finished and processed goods. The continent continues to export super cheap raw materials to advanced economies then turns around and sells its own products at a higher price,’ he explains.
The research came up with four main conclusions: that reciprocal trade agreements increase exports of participating African countries more than non-reciprocal trade agreements; that different African regional trade blocks intensify member countries’ exports to different degrees; that African migrant network plays an important role in facilitating their home countries’ traders import than export, and that service trade helps enhance income accrued to the service sector.
He adds that some of the results were surprising including the finding that it’s not immigrants who influence the ‘migrants’ trade creation effect’ but rather the capability of the home-country traders to export.
‘The available cross country data reveals that for all income group countries, the service sector is becoming the leading contributor of GDP of nations but trade in services still lagged significantly behind commodity trade,’ he says.
As a result, Samuel says he went on to investigate whether trade in services cause economic growth.
‘My results established that trade in services, like commodity trade, also raise per capita income. The coefficient estimations are also precise and robust.’
A recipient of a full PhD scholarship from Deakin, Samuel was able to travel overseas for his research and also attend a summer school at the University of Oxford in the UK.
He says these important opportunities enhanced his research capabilities and empowered him to become a more assertive, analytical and independent researcher.
Now writing four papers and preparing them for journal submission, Samuel says his PhD experience required discipline, an inquisitive mind, and the ability to meet strict deadlines.
‘However, it’s also very rewarding, fulfilling and engaging. My advice to prospective HDR students is a quote from [German philosopher] Goethe: “Whatever you can do or dream you can, begin it. Boldness has genius, power and magic in it!”’