Deep Regional Trade Agreement as a Driver for Global Value Chains in Africa: The Case of ECOWAS Region
The paper investigates the effects of deep regional trade agreement (RTA) on global value chains (GVCs) for 11 countries from the Economic Community of West African States (ECOWAS) region over the period 1996‒2018 by applying the fractional logit regression technique. GVCs are calculated as shares of foreign value-added (FVA), domestic value-added (DVA), and DVA exports (DVX) in gross exports. Unlike previous works that often use the binary variable, the deepening of RTA is measured by a new continuous indicator, the ratio between the cumulative number of protocols and conventions ratified and the cumulative number of protocols and conventions signed. Second, the paper analyses control of corruption as a channel through which deep RTA influences GVCs. The findings reveal that, deepening RTA significantly increases FVA while it reduces DVA, but only at the 10% level and the findings become insignificant with the inclusion of control variables. Furthermore, our findings indicate the existence of a complementarity relationship between deep RTA and control of corruption in DVX model. ECOWAS governments should pursue the ratification of protocols and conventions and the fight against corruption to take advantage of deep integration in terms of the participation in GVCs.
Deep regional trade agreement; Global value chains; ECOWAS; Fractional logit regression; Panel data.