Internationalization Theories and Africa’s Economic Growth Prospects

Abstract

The economic growth literature provides several sound theoretical arguments suggesting a strong and positive link between trade openness and economic growth. Openness facilitates technology transfer, knowledge generation and diffusion. It also increases scale economies and operational efficiency through the exposure of firms to competition within domestic and foreign markets. Available empirical evidence suggests that economies that are more open to trade and capital flows have higher GDP per capita and grow faster (Dollar and Kraay, 2000). Studies on the internationalization process of SSA firms are therefore extremely relevant for an understanding of the economic growth and development prospects of African countries.