Abstract
The literature on Regional Trade Agreements (henceforth RTAs) has a long pedigree, including a significant number of studies of African RTAs. This paper: a) reviews the theoretical and empirical literature on RTAs, especially in relation to Africa; b) considers the most appropriate empirical methodology with which to assess the efficacy of RTAs within the African context, and c) uses a relevant Gravity Trade Model to conduct an econometric analysis of two prominent African RTAs in order to assess whether these RTAs have facilitated an increase in trade between member countries in terms of food and agricultural commodities. The chapter focuses on the two African RTAs: COMESA (Common Market for Eastern and Southern Africa) and; SADC (Southern African Development Community). The chapter also considers the policy implications from the econometric model. The discussion concludes with an appraisal of the effects of the numerous Trade Costs (TC), Non-Tariff Barriers (NTBs) and Non-Tariff Measures (NTMs) which often limit the efficacy of RTAs in Africa, especially in relation to food and agricultural commodities. Recommendations for alleviating the effects of these trade obstacles are highlighted including improved indicators for measuring their impact.
The econometric results from this study, as is common in many studies using the Gravity Trade Model in the context of RTAs, are far from conclusive. They also depend on which econometric approach is adopted. In the Chapter, a key focus is to analyse some of the data and methodological considerations that can impact on the estimation procedure such as: the prevalence of zero trade values and endogeneity problems in the specification of the variables within the model.
The Pseudo-Poisson Maximum Likelihood technique is adopted as this is widely considered to be an appropriate econometric methodology for dealing with these considerations. The econometric results suggest that while trade creation effects within COMESA and SADC are identified, the significance of the traditional Gravity type variables such as common language, common border, distance, and size is less clear cut. Moreover, the prevalence of overlapping or joint membership of more than one RTA may be difficult to justify at least in terms of stimulating greater trade between member countries in food and agricultural commodities.
The econometric results from this study, as is common in many studies using the Gravity Trade Model in the context of RTAs, are far from conclusive. They also depend on which econometric approach is adopted. In the Chapter, a key focus is to analyse some of the data and methodological considerations that can impact on the estimation procedure such as: the prevalence of zero trade values and endogeneity problems in the specification of the variables within the model.
The Pseudo-Poisson Maximum Likelihood technique is adopted as this is widely considered to be an appropriate econometric methodology for dealing with these considerations. The econometric results suggest that while trade creation effects within COMESA and SADC are identified, the significance of the traditional Gravity type variables such as common language, common border, distance, and size is less clear cut. Moreover, the prevalence of overlapping or joint membership of more than one RTA may be difficult to justify at least in terms of stimulating greater trade between member countries in food and agricultural commodities.
Original language | English |
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Pages | 19-19 |
Number of pages | 1 |
Publication status | Published - 6 Apr 2017 |
Event | 2nd Annual Research Conference of the Centre for African Research on Enterprise and Economic Development (CAREED) - University of the West of Scotland, Paisley, United Kingdom Duration: 6 Apr 2017 → 7 Apr 2017 |
Conference
Conference | 2nd Annual Research Conference of the Centre for African Research on Enterprise and Economic Development (CAREED) |
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Abbreviated title | CAREED 2017 |
Country/Territory | United Kingdom |
City | Paisley |
Period | 6/04/17 → 7/04/17 |