Does Trade Openness Reduce Unemployment in Developing Countries? Evidence from the Central African Economic and Monetary Community (CEMAC)

Countries in the Central African Economic and Monetary Community (CEMAC) face unemployment in the context of increased trade openness, making the zone among those with the highest unemployment rates. This study investigates the effects of trade liberalization on unemployment (overall and among young people) in the CEMAC by applying the standard error-corrected panel linear regression model (PCSE) and analyzing data from the six CEMAC countries for 2002 to 2022. The results show that trade openness reduces overall and youth unemployment. Accordingly, a one-point increase in the trade openness index is associated with a 4.4% and 8% reduction in overall and youth unemployment, respectively. These results suggest that policies that strengthen trade openness should be given greater prominence. Such policies include guaranteeing a trade-friendly environment by easing barriers to trade, such as customs duties, significantly improving the business climate, prioritizing trade agreements, and encouraging and incentivizing export-oriented products.