of GDP on the sources of growth is positive (although its impact is not significant in the TFP growth equation). Having said this, the bulk of the impact on growth is transmitted through faster capital accumulation.

**Table 5. Trade openness, diversification and growth: Augmented Specification**

_Dependent Variable: Growth of real GDP per worker (5-year averages) Estimation method: GMM-IV System Estimator (Arellano and Bover, 1995; Blundell and Bond 1998)_

||Annu|al Average Grow|th of:|Annu|al Average Growt|h of:|
|---|---|---|---|---|---|---|
||Output<br>per worker|Capital per<br>worker|TFP|Output per<br>worker|Capital per<br>worker|TFP|
||[1]|[2]|[3]|[4]|[5]|[6]|
|_Convergence_|||||||
|<br>Initial GDP per worker|-0.017<sup>***</sup>|-0.0073<sup>***</sup>|-0.011<sup>***</sup>|-0.019<sup>***</sup>|-0.010<sup>***</sup>|-0.011<sup>***</sup>|
|<br>_(in logs)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|
|_Trade Openness_|||||||
|Exports and Imports|0.020<sup>***</sup>|0.015<sup>***</sup>|0.012<sup>***</sup>|0.014<sup>***</sup>|0.005<sup>*</sup>|0.010<sup>***</sup>|
|_(% of GDP, logs)_<br>_Trade Diversification_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|_(-0.022)_|_(0.000)_|
|Market concentration|-0.001|0.003<sup>*</sup>|0.0006|0.005<sup>***</sup>|0.007<sup>***</sup>|0.003<sup>**</sup>|
|_(Herfindahl index)_|_(-0.143)_|_(-0.034)_|_(-0.317)_|_(0.000)_|_(0.000)_|_(-0.009)_|
|Product concentration|-0.018<sup>***</sup>|-0.020<sup>***</sup>|-0.011<sup>***</sup>|-0.015<sup>***</sup>|-0.015<sup>***</sup>|-0.010<sup>***</sup>|
|_(Herfindahl index)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|
|_Natural Resource Exports_|||||||
|Natural resource exports|..|..|..|0.005<sup>***</sup>|0.004<sup>**</sup>|-0.00005|
|_(% of GDP)_||||_(0.000)_|(-0.003)|(-0.956)|
|<br>Natural resource exports|..|..|..|-0.015<sup>***</sup>|<br>-0.012<sup>***</sup>|<br>-0.005<sup>**</sup>|
|<br>_(% of total exports)_||||_(0.000)_|_(0.000)_|(-0.002)|
|_Additional Growth Drivers_|||||||
|Secondary enrollment rate|0.004<sup>***</sup>|-0.002|0.002<sup>**</sup>|0.002<sup>*</sup>|-0.003<sup>*</sup>|0.002<sup>**</sup>|
|<br>_(initial level, logs)_|_(0.000)_|_(-0.102)_|_(-0.003)_|_(-0.035)_|_(-0.044)_|_(-0.004)_|
|ICRG Political risk index|0.006<sup>***</sup>|0.0002|0.005<sup>***</sup>|0.006<sup>***</sup>|0.001<sup>*</sup>|0.005<sup>***</sup>|
|_(principal components)_|_(0.000)_|_(-0.470)_|_(0.000)_|_(0.000)_|_(-0.015)_|_(0.000)_|
|Credit to private sector|-0.011<sup>***</sup>|-0.007<sup>***</sup>|-0.009<sup>***</sup>|-0.011<sup>***</sup>|-0.006<sup>***</sup>|-0.009<sup>***</sup>|
|<br>_(% of GDP)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|
|<br>General government consumption|-0.007<sup>***</sup>|0.002|-0.009<sup>***</sup>|-0.005<sup>**</sup>|0.009<sup>***</sup>|-0.011<sup>***</sup>|
|_(% of GDP)_|_(0.000)_|_(-0.306)_|_(0.000)_|_(-0.003)_|_(0.000)_|_(0.000)_|
|<br>Growth volatility|<br>-0.086<sup>***</sup>|<br>0.019|<br>-0.009|<br>-0.102<sup>***</sup>|<br>-0.068<sup>***</sup>|<br>0.026<sup>*</sup>|
|_(S.D. growth per worker)_|_(0.000)_|_(-0.145)_|_(-0.393)_|_(0.000)_|_(0.000)_|_(-0.010)_|
|<br>Constant|<br>0.105<sup>***</sup>|<br>0.015<sup>*</sup>|<br>0.088<sup>***</sup>|<br>0.146<sup>***</sup>|<br>0.066<sup>***</sup>|<br>0.101<sup>***</sup>|
||_(0.000)_|_(-0.013)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|
|Observations|611|611|611|601|601|601|
|AR(1)|0.000|0.252|0.000|0.001|0.126|0.000|
|AR(2)|0.483|0.005|0.936|0.252|0.003|0.887|
|<br>Hansen|0.349|0.43|0.319|0.349|0.369|0.32|

_p_ -values in parentheses * _<u>p</u>_ < 0.05, ** _<u>p</u>_ < 0.01, *** _<u>p</u>_ < 0.001

# 4.4 Comparative Statics Analysis: Regional and International

We conduct a series of exercises to calculate the potential growth benefits of improving international trade integration in Sub-Saharan Africa. In this analysis, improving international trade integration involves expanding trade volumes, increasing export product diversification, and reducing the dependence on natural resources in the export basket. This implies the progress of trade indicators relative to a series of benchmarks for the region (as well as the different country groups classified by their extent of natural resource abundance). In the context of our analysis, the _page 24_