Expanding the Benefits of Trade to sub-Saharan African Firms Through Trade Facilitation Initiatives
Date
2020-11-15
Authors
Abdoulaye, Seck
Journal Title
Journal ISSN
Volume Title
Publisher
African Economic Research consortium
Abstract
Firms across sub-Saharan Africa still suffer from a large variety of on-the-border
and behind-the-border trade barriers. This paper empirically investigates how
reducing these trade-related costs and constraints through trade facilitation
reforms would increase firms’ trade participation and propensity. With data
from the World Bank's Enterprise Surveys and a two-stage selection model,
the paper suggests that improving customs clearance, government regulations,
trade financing and energy and telecommunication infrastructure contributes
to significantly increase both trade margins for exporting and importing firms.
Furthermore, importers tend to be more responsive than exporters, suggesting an adverse short-term adjustment of the balance of payments. The results also indicate
a sizable distributive effect, as larger and smaller firms gain differently depending on
the reforms and the trade flows. Additionally, firms in sub-Saharan Africa appears to
be more responsive to a changing environment than their counterparts in the rest of
the developing world, owing to the greater trade-related constraints, uncertainty and
risk that they face; which suggest that firms in the sub-continent are very resilient and
not averse to international trade. All of these could add to the ongoing debate over
how to better harness the trade potential of sub-Saharan African firms.