Financial Inclusion and the Trade-Growth Nexus: Evidence from the Emerging Zimbabwean Economy

  • Alexander Maune University of South Africa, Pretoria, South Africa
Keywords: Financial Inclusion, Economic Growth, Trade Openness, Emerging Economy, Zimbabwe


This study examined the effect of financial inclusion in the trade-growth nexus in Zimbabwe using time series data collected from the World Bank databases from 1980 to 2016. The study precisely examined whether financial inclusion is a passage within which trade openness impacts growth in Zimbabwe. Also examined was the complementarity effect of financial inclusion and trade openness on growth. The effect of financial inclusion and trade openness on growth has received much attention from researchers across the globe and literature is awash with theoretical and empirical evidence of such studies. What is yet to be examined is whether financial inclusion is a passage within which trade openness influences growth. The study finds a negative significant effect of financial inclusion and trade openness on growth in Zimbabwe. Moreover, the findings show a complementary, strong and positive nexus linking financial inclusion and trade openness on growth in Zimbabwe. Policy-makers are, however, implored to formulate policies meant to deepen financial inclusion in order to enhance growth through trade openness. The article will help expand the academic knowledge and as such contribute in filling the gap that exists within the body of knowledge. The article is important to policy-makers, the academia, private sector and researchers at large.


Download data is not yet available.


Abdullahi, A., Safiyanu, S. & Soja, T. (2016). International Trade And Economic Growth: An Empirical Analysis Of West Africa. Journal of Economics and Finance, 12-15.
Afzal, M. & Hussain, I. (2010). Export-led growth hypothesis: Evidence from Pakistan. Journal of Quantitative Economics, 130-147.
Balassa, B. (1978). Exports and economic growth, further evidence. Journal of Development Economics, 181-189.
Baltagi, B., Demitriades, P. & Law, S. (2009). Financial development, openness and institutions. Journal of Development Economics, 285-296.
Barajas, A., Chami, R. & Yousefi, R. (2011). The Impact of Financial Development on Economic Growth in the Mena Region. Finance and Development.
Barro, R. & Sala-i-Martin, X. (1997). Technological diffusion, convergence, and growth. Journal of Economic Growth, 1-26.
Beck, T., Demirguc-Kunt, A. & Levine, R. (2007). Finance, Inequality and the Poor. Journal of Economic Growth, 27-49.
Bornschier, V. & Chase-Dunn, C. (1985). Transnational Corporations and Underdevelopment. New York: Praeger.
Brooks, C. (2008). Introductory Econometrics for Finance (2nd ed). New York: Cambridge University Press.
Brueckner, M. & Lederman, D. (2015). Trade openness and economic growth: Panel data evidence from Sub-Saharan Africa. Economica, 1302-1323.
Chang, R., Kaltani, L. & Loayza, N. (2009). Openness can be good for growth: The role of policy complementarities. Journal of Development Economics, 33-49.
Dickey, D. & Fuller, W. (1979). Dickey, D. A.,Distribution of the estimators for autoregressive time series with a unit root. Journal of the American Statistical Association, 427-431.
Dollar, D. & Kraay, A. (2004). Trade, Growth and Poverty. Economic Journal, 22-49.
Dufrenot, G., Mignon, V. & Tsangarides, C. (2010). The trade-growth nexus in the developing countries: A quantile regression approach. Review of World Economics, 731-761.
Elliott, G., Rothenberg, T. & Stock, J. (1996). Efficient tests for an autoregressive unit root. Econometrica, 813-836.
Evans, O. (2015). The Effects of Economic and Financial Development on Financial Inclusion in Africa. Review of Economic and Development Studies, 17-25.
Fenira, M. (2015). Trade openness and growth in developing countries: An analysis of the relationship after comparing trade indicators. Asian Economic and Financial Review, 468-482.
Frankel, J. & Romer, D. (1999). Does trade cause growth? American Economic Review, 379-399.
Freund, C. & Bolaky, B. (2008). Trade, regulations, and income. Journal of Development Economics, 309-321.
Grossman, G. & Helpman, E. (1991). Innovation and Growth in the Global Economy. Cambridge: MIT Press.
Herzer, D. (2013). Cross-country heterogeneity and the trade-income relationship. World Development, 194-211.
Jayme Jr, F. G. (2001). Notes on Trade and Growth. Cedeplar-UFMG, 1-25.
Keho, Y. (2017). The impact of trade openness on economic growth: The case of Cote d’Ivoire. Cogent Economics & Finance, 1-14.
Keynes, J. (1936). The general theory of employment, interest and money. New York: Harcourt, Brace & Co.
Kim, D. & Lin, S. (2009). Trade and growth at different stages of economic development. Journal of Development Studies, 1211-1224.
Kim, D., Lin, S. & Suen, Y. (2011). Nonlinearity between trade openness and economic development. Review of Development Economics, 279-292.
Klasra, M. (2011). Foreign direct investment, trade openness and economic growth in Pakistan and Turkey: An investigation using bounds test. Quality and Quantity, 223-231.
Lawal, A. I., Nwanji, T. I., Asaleye, A. & Ahmed, V. (2016). Economic growth, financial development and trade openness in Nigeria: An application of the ARDL bound testing approach. Cogent Economics and Finance, 1-15.
Mangir, F., Acet, H. & Baoua, M. (2017). An Empirical Analysis On The Relationship Between Trade Openness And Economic Growth In Niger. [email protected] Proceedings (pp. 1-14). Paris: EconWorld.
Marrewijk, C. (2012). International Economics: Theory, Application and Policy. Oxford : Oxford University Press.
Maune, A. (2017). The Role of Competitive Intelligence in Trade Facilitation in an Emerging Economy. Journal of Economics and Behavioral Studies, 132-148.
McKinnon, R. (1973). Money and Capital in Economic Development. Washington, DC: Brookings Institution.
Musara, M., Gwaindepi, C. & Dhoro, N. (2014). Relationship between International Trade and Economic Growth: A Cointegration Analysis for Zimbabwe. Mediterranean Journal of Social Sciences, 621-627.
Musila, J. & Yiheyis, Z. (2015). The impact of trade openness on growth: The case of Kenya. Journal of Policy Modeling, 342-354.
Newey, W. K. & West, K. (1987). A simple, positive semi-definite, heteroskedasticity and autocorrelation consistent covariance matrix. Econometrica, 703-708.
Otchere, I. (2016). Financial Inclusion and development in Africa: Gaps, Challenges and Policy. 18th AERC Senior Policy Seminar (pp. 1-19). Nairobi: AERC.
Phillips, P. & Perron, P. (1988). Testing for a unit root in time series regression. Biometrika, 335–346.
Polat, A., Shahbaz, M., Rehman, I. & Satti, S. (2015). Revisiting linkages between financial development, trade openness and economic growth in South Africa: Fresh evidence from combined cointegration test. Quality and Quantity, 785-803.
Rassekh, F. (2007). Is international trade more beneficial to lower income economies? An empirical inquiry. Review of Development Economics, 159–169.
Rigobon, R. & Rodrik, D. (2005). The rule of law, democracy, openness, and income: Estimating the Interrelationships. The Economics of Transition, 533-564.
Rivera-Batiz, L. & Romer, P. (1991). International trade with endogenous technological change. European Economic Review, 971-1001.
Sakyi, D., Villaverde, J. & Maza, A. (2015). Trade openness, income levels, and economic growth: The case of developing countries, 1970–2009. The Journal of International Trade & Economic Development, 860-882.
Sarma, M. & Pais, J. (2010). Financial Inclusion and Development: A Cross-Country Analysis. Indian Council for Research on International Economic Relations, 1-28.
Sarma, M. & Pais, J. (2011). Financial inclusion and development. Journal of international Development, 613-628.
Sassia, S. & Goaied, M. (2012). Financial Development, ICT Diffusion and Economic Growth: Lessons from MENA Region. Telecommunications Policy, 252-261.
Shahbaz, M. (2012). Does trade openness affect long-run growth? Cointegration, causality and forecast error variance decomposition tests for Pakistan. Economic Modelling, 2325-2339.
Shaw, E. (1973). Financial Deepening in Economic Development. New York: Oxford University Press.
The World Bank. (2017, June 16). World Development Indicators/Data. Retrieved September 19, 2018, from The World Bank:
UlaÅŸan, B. (2015). Trade openness and economic growth: Panel evidence. Applied Economics Letters, 163-167.
Usman, O. (2011). Performance evaluation of foreign trade and economic growth in Nigeria. Research Journal of Finance and Accounting, 1-15.
Vamvakidis, A. (2002). How robust is the growth-openness connection: Historical evidence. Journal of Economic Growth, 57-80.
Vlastou, I. (2010). Forcing Africa to open up to trade: Is it worth it? The Journal of Developing Areas, 25-39.
Wong, Y. (2015, May 15). IMF-MIT Study Shows How Financial Inclusion Drives Economic Growth. Retrieved July 27, 2018, from Mastercard Center for Inclusive Growth:
Zahonogo, P. (2017). Trade and economic growth in developing countries: Evidence from sub-Saharan Africa. Journal of African Trade, 41-56.
How to Cite
Maune, A. (2019). Financial Inclusion and the Trade-Growth Nexus: Evidence from the Emerging Zimbabwean Economy. Journal of Economics and Behavioral Studies, 10(6A(J), 43-55.
Research Paper