Research on World Agricultural Economy

The Impact of Business Cycle on Economic Growth in Selected Five African Countries: A Dynamic Panel Data Analysis

Sani Abdullahi Sule

Faculty of Economics and Business, Universitas Sebelas Maret, Surakarta 57126, Indonesia

Mustafa Latif Emek

Institute of Economic Development and Social Research (İKSAD Institute), Söğütözü, Çankaya, Ankara 06510, Türkiye

Lukman Hakim

Department of Economic, Saadatu Rimi College of Education, Kano 700231, Nigeria

Tetuko Rawidyo Putro

Faculty of Economics and Business, Universitas Sebelas Maret, Surakarta 57126, Indonesia

DOI: https://doi.org/10.36956/rwae.v6i4.1944

Received: 4 April 2025 | Revised: 19 May 2025 | Accepted: 16 June 2025 | Published Online: 3 November 2025

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Abstract

This study investigates the impact of business cycles on agricultural economic growth in Nigeria, South Africa, Egypt, Algeria, and Kenya from 2001 to 2021, providing critical insights into how macroeconomic fluctuations influence agribusiness investment, food security, and trade stability in Africa. The research is grounded in the need to understand the asymmetric effects of economic dynamics in diverse African contexts, where agriculture remains a vital sector for development and livelihoods. Utilizing dynamic panel data analysis via the Generalized Method of Moments (GMM), the study examines the roles of interest rates, inflation, foreign direct investment (FDI), and exchange rate volatility on agricultural Gross Domestic Product (GDP) in both short-term and long-term perspectives. Findings indicate that interest rates, FDI, and moderate inflation positively contribute to short-term growth, while exchange rate fluctuations and economic downturns hamper agribusiness financing and food security. Long-term growth relies heavily on sustaining FDI inflows and maintaining stable interest rate policies. By applying GMM, this research advances understanding of the complex, dynamic relationships between business cycles and agricultural development, offering valuable insights into strengthening the resilience of rural economies. The study concludes that policymakers should implement targeted monetary strategies that stabilize investment environments, promote FDI, and control inflation to foster sustainable agricultural growth, ensure food security, and enhance economic stability across the studied countries.

Keywords: Business Cycle; Agricultural Growth; Foreign Direct Investment; Interest Rates; Agricultural Trade; Inflation; Food Security

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