Regional Integration and Services in African Value Chains: Retrospect and Prospect
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Date
2022-07
Authors
Shepherd, Ben
Journal Title
Journal ISSN
Volume Title
Publisher
African Economic Research Consortium
Abstract
This paper takes a first step towards understanding the quantitative evidence on the
role of commercial services in African value chains. The available data are largely
based on assumptions and modelled estimates, but can nonetheless provide some
useful information at an aggregate level. In general, services play an important role
in the African regional economy, including through their embodiment in the exports
of other sectors through input-output relationships. However, services value chains
in the region are mostly composed of domestic value-added, and to a lesser extent
inputs sourced from global suppliers. There is very little intra-regional sourcing of
commercial services inputs. Simulations using a new quantitative trade model show
that intra-regional sourcing could be increased through a derived demand effect
following goods market liberalization. In the stylized cases examined, increased use
of regional services inputs is not at the expense of globally competitive suppliers,
although is some variation at a sub-regional level. As such, it will be important to give
a more prominent role to services in discussions of regional integration going forward.
Description
Keywords
Trade in services; Global value chains; New quantitative trade model; Input-output analysis.