Linkage between alcohol consumption and economic growth in sub-Saharan Africa: Linear effect, threshold effect, or both?
2021
Rodrigue Nobosse Tchoffo | Guivis Zeufack Nkemgha
This paper contributes to the literature on the relationship between alcohol consumption and economic growth. Despite growing attention on the topic, existing studies have demonstrated the existence of a threshold beyond which alcohol consumption leads to disease, negatively influences professions such as driving and leads to death. However, the threshold literature has not yet explored the nonlinear relationship between alcohol consumption and economic growth. The per capita alcohol consumption expenditure is used to capture the alcohol variable. The empirical evidence is based on the Pooled Mean Group (PMG) and System Generalized Method of Moments (GMM) with a 32 sub-Saharan African countries dataset over the period 2000-2016. The empirical evidence indicates that alcohol consumption fosters economic growth in sub-Saharan African countries. Moreover, the results show that an alcohol consumption threshold exists below which greater alcohol consumption has beneficial effects on economic growth and above which the alcohol consumption has a perverse effect on economic growth. This result materializes the existence of an inverted U-shape (Laffer Curve of alcohol). Therefore, Sub-Saharan African countries must control the level of alcohol consumption of their citizens in order not only to protect them against alcohol diseases but also to ensure sustainable growth.
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