How Facilitating Trade would benefit Trade in Sub-Saharan Africa
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Date
2018-08-12
Authors
Seck, Abdoulaye
Journal Title
Journal ISSN
Volume Title
Publisher
African Economic Research consortium
Abstract
Despite a significant trade expansion that has been above the world average in the recent
period, Sub-Saharan Africa still remains relatively marginalized in the world trading
system. This paper sets out to analyze the extent to which various elements of the trade
cost landscape in the sub-continent may have contributed to shape trade patterns both
within the region and with the outside world. Various trade facilitation measures such
as border efficiency, physical infrastructure and regulatory environment are related to
bilateral trade flows in a gravity framework. The results based on the Poisson pseudomaximum likelihood indicate that a one-standard-deviation increase in trade facilitation
measures could yield up to 33% increase in exports, and raising the sub-continent to the
level of the world average would amount to reducing bilateral distance by 1.8% to 4.5%, or
reducing ad valorem tariff by 1.8 to 12.8 percentage points. The extent of the gains varies
greatly across the trade facilitation measures, commodity sectors, export destinations,
and depends on which trading partner undertakes the corresponding reforms. Policies
aimed at boosting trade could focus more on improving border efficiency that appears
to be more cost-effective especially in the context of budget-constrained governments
across the sub-continent.