Commerce

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Determinants of imports in Nigeria: A dynamic specification
(The African Economic Research Consortium, 1999-03) Egwaikhide, Festus 0.
This study examines the determinants of aggregate imports and its components in Nigeria between 1953 and 1989. The estimated equations rest on the stock adjustment import exchange model that has its roots in the balance of payments theory and in the consumer theory of demand as in the traditional import demand function. Quantitative estimates, based on integration and error correction specification, indicate that foreign exchange earnings, relative prices and real income all significantly determine the behaviour of total imports in the reference period. Findings also show that the short-run import decisions are determined by the dynamics of foreign exchange, which is tied to the long-run effect through the feedback mechanism. The results of the disaggregated imports also reveal the importance of foreign exchange. Thus, it is concluded that if the Nigerian government wishes to increase imports, it is essential to implement economic policies that will enhance foreign exchange availability. The near unity of the price elasticity of demand suggests that exchange rate policy can be used to influence imports in the country.
An Empirical Evaluation of Trade Potential in Southern African Development Community
(AERC, 2011-08) Simwaka, Kisukyabo
This paper attempts to estimate the trade potential expected from the Southern African Development Community Free Trade Area (SADC FTA). Specifically, the study investigates what the southern African countries stand to gain by way of increases in intra-regional trade if all trade barriers are removed. In order to assess the trade potential compared to its current level, a gravity model has been estimated. Results show that the observed intra-regional trade is lower than its potential. The results suggest that there is trade potential in the sub-region. There is no question that an FTA will enhance the prospects for increasing intra-regional trade. The results are in agreement with Evans (1997), who found that the FTA is likely to lead to trade creation, and also the African Development Bank (1993) whose results found that there is considerable potential for the non-Southern African Customs Union (SACU) countries to switch supply from developing countries to South Africa. The results, however, differ with Chauvin and Gaullier (2002) and Cassim (2001) whose results indicated that SADC trade potentials are rather small, especially for South African exports. They also differ with Elbadawi (1997) whose results indicate that SADC did not have a significant effect on trade among its members.
An empirical evaluation of trade potential in the economic community of West African States
(The African Economic Research Consortium, 1988-11) Ogunkola, Olawale E.
Intra-ECOWAS trade has remained very low despite the integration efforts in the subregion in the past two decades. While noting that these efforts have not progressed as scheduled, this study investigates what the West African countries stand to gain by way of increases in intra-regional trade flows if all trade barriers are removed. The study uses a gravity model whose results suggest that there is trade potential in the subregion.
Financial Inclusion and Entrepreneurship in Six Sub Saharan African Countries: Evidence from FinAccess and FinScope Survey Data
(African Economic Research Consortium, 2023-06) GAKPA, Lewis-Landry
This paper investigates how financial inclusion affects individuals’ decisions to start businesses in the context of six Sub-Saharan African countries, using micro-data from the FinScope and FinAccess surveys. To do so, we use an instrumental variable (IV) technique to assess the empirical relationships. Overall, the results reveal that access to banking services, formal non-banking services, informal financial services and mobile money services positively and significantly influence the decision to start businesses in the six countries, namely Kenya, Rwanda, Tanzania, Uganda, Namibia and Zambia. Furthermore, although the results show that a range of both demand and supply-side barriers prevent individuals from accessing banking services for entrepreneurial purposes, supply-side constraints are the most common barriers to individuals starting a business. In view of the above, policy interventions should first aim at creating an enabling environment to increase people’s access to all types of financial services and, secondly, address both supply- and demand-side constraints to promote entrepreneurship and economic growth. These measures should be aimed at increasing the level of financial inclusion with a view to stimulating entrepreneurial activities, which are the real pillars in development and poverty reduction process in Sub-Saharan African countries.
The Impact of Cross-country Heterogeneity on Consumer Energy Efficiency: Evidence from a Panel of African Countries
(AERC, 2021-04-19) Adetutu, Morakinyo; Ajayi, Victor A.
Considering the widespread depletion of global energy resources, the efficient use of energy is required to guarantee energy access and reduce energy poverty. To this end, this study investigates the level of residential energy efficiency for 17 African countries during the period 1980-2011. Using the parametric stochastic frontier analysis (SFA), we estimated residential energy demand and energy efficiency. Further, we modelled the impact of cross-country heterogeneity on the level of energy use efficiency. Results indicate an average efficiency level of 70%, implying modest levels of residential energy efficiency across our sampled countries. Moreover, we observed that crosscountry variation in energy efficiency levels is influenced by national characteristics. Based on our results, we argue that energy policies should be conditional on countryspecific factors and considerations.
Import Demand in Ghana: Structure, Behaviour and Stability
(AERC, 2011-01) Harvey, Simon; Sedegah, Kordzo
This study analyses the structure of, and model demand for imports into Ghana using time series data from 1967 to 2004. Also, it assesses the long-run and short-run elasticities of aggregate imports and their components, and determines whether the import demand function has shifted during the period under consideration as a result of trade liberalization. Cointegration and error correction models are used to estimate parsimonious models for aggregate imports and three other categories. The results indicate that domestic income, foreign exchange reserves and trade liberalization all play significant roles both in the short-run and long-run import demand levels in Ghana. We also find that there is general parameter stability in the import demand functions over the study period. Therefore, trade policy authorities who aim at reducing imports to correct balance-of-payments imbalances in the long run should focus their efforts on policies that will increase the per capita income at the macroeconomic level and implement policies that will ensure an even distribution of per capita income to reduce poverty.
Intra-Industry Trade between Members of the PTA/COMESA Regional Trading Arrangement
(AERC, 1997-03) MUSONDA, FLORA M.
Using available bilateral trade data between members of the Common Market for Eastern and Southern Africa (COMESA) formerly PTA, this study estimated the extent of Intra-industry trade and the factors that determine this trade in the region. The hypothesis was that intra-industry trade exists in this region. The results of the study show that indeed this trade does exist and it is determined by the same factors as found in other regions. The principal determinant is distance, which has a negative significant relationship with intra-industry trade. Other factors include per capita income and language. The trade is more significant in bordering countries that are relatively more developed in terms of their manufacturing sectors. Special ties also seem to play a role, although the variable was not significant in the regression analysis. Improved communication networks will enhance this trade within the region.
Potentials for diversifying Nigeria’s non-oil exports to Non-traditional Markets
(AERC, 1997-11) Osuntogun, A.; Edordu, C.C.; Oramah, B. O.
Not available
Poverty, inequality and welfare effects of trade liberalization in Côte d'Ivoire: A computable general equilibrium model analysis
(AERC, 2006-10-01) Bédia F. Aka
This paper attempts to quantify the effects of removing trade taxes and instituting some necessary fiscal reform on poverty and income distribution in Côte d’Ivoire. It first analyses income distribution for various homogenous socioeconomic groups using an absolute poverty line based on the constant basic needs approach. Next it simulates and analyses in a computable general equilibrium (CGE) model the impact on poverty, inequality and welfare of the elimination of taxes on agricultural exports and imports combined with a change in the domestic tax rate. The results show that poverty increases for all households, but depending on the simulations the situation is diversified among socioeconomic groups. Liberalizing trade by removing tax on exports leads to an increase in domestic prices of agricultural and industrial goods, resulting in an increase in the consumer price index and a decrease in households’ disposable income and thus in their consumption. Public employees are identified as the most affected by poverty following trade tax reform
Trade Liberalization Financing and its Impact on Poverty and Income Distribution in Ghana
(AERC, 2011-01) Bhasin, Vijay K.
Ghana has adopted a Growth and Poverty Reduction Strategy that emphasizes increased focus on poverty reduction in the design and implementation of its policies. This study uses a CGE model, social accounting matrix and data from the 1999 Ghana Living Standards Survey 4 to examine the impact of unilateral partial trade liberalization both in isolation and combined with foreign capital inflows and value-added tax on the poverty and income distributions of various categories of households. Those included were agricultural households, public sector employees, private sector employees, nonfarm self-employed workers and non-working persons. The study found that eliminating trade-related import and export tariffs on agricultural goods and import tariffs on industrial goods in isolation, combined with foreign capital inflows and combined with VAT reduces the incidence, depth and severity of poverty of all categories of households, with the exception of the incidence of poverty of public sector employees and the non-working group when import tariffs on industrial goods are eliminated in isolation. On the other hand, elimination of trade-related export tariffs on industrial goods in isolation and combined with foreign capital inflows increases the incidence, depth and severity of poverty of all categories of households, with the exception of the incidence of poverty of the non-working group. Moreover, elimination of trade-related export tariffs on industrial goods combined with VAT reduces the incidence, depth and severity of poverty of all categories of households. Income distributions of the private sector employees and the non-working group were found to improve to a larger extent when trade liberalization in isolation is considered. For agricultural households, on the other hand, the income distribution improves to a larger extent when trade liberalization is combined with foreign capital inflows and VAT. Results also indicate that financing of unilateral partial sector-wise trade liberalization through domestic resources (VAT) could have a greater impact on poverty alleviation and improvement in the income distributions of households than the foreign resources (foreign capital inflows).
Zimbabwe’s Experience With Trade Liberalization
(AERC, 2012-11) Makochekanwa, Albert; Hurungo T., James; Kambarami, Prosper
The paper investigated Zimbabwe’s experience with trade liberalization for the period 1980 to 2004. The study used three approaches, namely changes in policy, changes in quantities and changes in price to analyse the country’s trade policy during this period. These approaches indicated that the country’s trade liberalization was not consistent with policies that the government implemented between 1980 and 2004. The study also found out that the country’s liberalization process was credible and sustainable during the Economic Structural Adjustment Programme (ESAP) period (1991 through to 1995), after which credibility was lost when the liberalization process became unsustainable. Reduced credibility was a direct result of policy reversals that were instituted after 1995 while a combination of accumulated balance of payments (BOP) deficits and budget deficits resulted in payments incompatibility, making trade liberalization unsustainable. The study also found that the political economy of the whole trade liberalization process was largely dominated by government (and to some extent individual politicians) with minimal input from the private sector (that is, producers and consumers). The analysis therefore pointed to one main policy recommendation, that is, for the country to reap the benefits of trade liberalization, it has to be consistent in its trade policy. Whilst in the short term, negative effects (in the form of reduced government revenue, for example) maybe experienced, it is in the long run that benefits start to accrue. Policy makers also need to be reminded that trade liberalization should be a process not an event and therefore a long time horizon is required when formulating and implementing trade liberalization policies.

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