Relationship between Commodity Dependence and Macroeconomic Variables on Selected Sub-Saharan Countries

Extant literature document different indicators as measures of macroeconomic performance (Afxentious and Serletis, 1996). This study used economic growth proxied by real GDP sourced from World Development Indicators. Economic growth has been used because it’s the most common variable used to measure macroeconomic performance (Bidarkota and Crucini, 2014). Other data for the study were sourced from WDI and were exports, imports, gross capital formation (% of GDP), population growth (annual %), and mineral and metal ores rent of the country of interest. The Commodity Dependence Index (〖CDI〗_(i,t) ) of country i at time t was computed as the as the ratio of export value of the dependent commodity to the total export value of the country. According to Carmignani (2010), different measures of commodity dependence yield different prediction accuracies that are largely influenced by the interaction of the fixed effects measures with the endogenous variables. As such, the present study will employ the aforementioned CDI for the various subcategories of commodity dependent SSA countries because it is influenced less by interaction of the fixed effects measures with the endogenous variables. Thus, a balanced annual panel data for 32 sub-Saharan countries from 2000 to 2020 was used for this study. The countries and period of study was informed by availability of data of interest. Specifically, 11 agricultural commodity dependent countries, 6 energy commodity dependent countries and 14 mineral and metal ore dependent countries were selected (Appendix 1).