An Analysis of the Impact of Merchandise Trade on Job Creation in Selected African Countries

Abstract

This study investigates the dynamic relationship between merchandise trade and job creation across eight African economies from 2000 to 2024, applying a panel data econometric framework to capture both cross-country and time-series variations. While trade liberalisation has long been posited as a driver of growth and employment, Africa’s heterogeneous structural conditions necessitate empirical verification of its job-creation effects. Using secondary data from the World Bank’s World Development Indicators, the analysis employs fixed and random effects models, complemented by robustness checks using the Hausman test, to estimate the effect of trade volume, export diversification, and import dependence on total employment rates. Results reveal that merchandise exports significantly enhance job creation in the manufacturing and services sectors, whereas excessive import dependence dampens employment gains. The findings highlight the crucial role of productive export capacity and regional value chains in translating trade openness into inclusive economic growth.

Furthermore, the study identifies human capital quality, infrastructure, and institutional strength as moderating variables that shape the trade-employment nexus. Policy implications advocate for trade strategies that deepen backward linkages, promote industrial upgrading, and foster labour-intensive production. Strengthening intra-African trade under the African Continental Free Trade Area (AfCFTA) framework can further amplify employment spillovers, particularly among young people and women. Ultimately, the study concludes that while merchandise trade remains a potent lever for structural transformation, its employment dividends hinge on targeted policy interventions that align trade expansion with domestic capacity building.