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African Regional Trade Agreements and Intra-African Trade

Nicholas Ngepah () and Maxwell C. Udeagha ()
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Maxwell C. Udeagha: University of Johannesburg, Postal: P.O Box 524, Auckland Park, 2006, South Africa

Journal of Economic Integration, 2018, vol. 33, issue 1, 1176-1199

Abstract: This paper investigates regional trade agreements in Africa by using panel data spanning 1995~2014. Trade creation and diversion effects are assessed through a gravity model estimated using the Eicker–White robust covariance Poisson pseudo-maximum likelihood method. This method proves superior to the usual nonlinear least square estimators, especially against heteroscedasticity and data with zero value. The findings suggest that regional trade agreements may enhance trade. The differences in effects can be matched with the effectiveness in implementation by respective member countries. The trade gains of regional trade agreements do not come at the expense of trade with non-members. By controlling for the duration within a regional trade agreement, we also show that a very small but significant share of the benefits occurs over time in the Economic and Monetary Community of Central Africa, Southern African Development Community, Southern African Customs Union, and West African Economic and Monetary Union. Trade benefits seem to decline over time in the East African Community.

Keywords: Regional Trade Agreements; Gravity Model; Trade Creation; Trade Diversion; African RTAs; Panel Data (search for similar items in EconPapers)
JEL-codes: C30 C33 F13 F15 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:ris:integr:0747

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