What Matters for the Rise in Trade? Evidence from the African Continental Free Trade Area

Kiet Tuan Duong, Luu Duc Toan Huynh, Povilas Lastauskas and Nam T. Vu

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: Using firm-level panel data on cross-border sales for 27 African economies (2002-2022), we study how the African Continental Free Trade Area (AfCFTA) reshaped firms’ international trade. Guided by a heterogeneous-firm model with two short-run channels, export-network history and capital-adjustment frictions, linked through goods-services input linkages, we document that the 2018 signing raised the ratio of international to total sales by 2.7 percentage points (pp) by 2022. The gains were uneven: firms with prior export experience outside Africa gained 2.8 pp, versus 1.2 pp for Africa-only exporters, and goods-producing firms and those facing lower adjustment frictions responded most. Network history and adjustment frictions thus shape who benefits from continental integration and how gains propagate across the goods-services linkage, so that an intra-continental agreement disproportionately rewards extra-continental traders.

Keywords: Adjustment Costs; Africa; Export Experience; Goods and Services Sectors; Ownership Structure; Trade Agreement (search for similar items in EconPapers)
JEL-codes: F13 F14 F18 F63 (search for similar items in EconPapers)
Date: 2026-10-01
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Working Paper: What Matters for the Rise in Trade? Evidence from the African Continental Free Trade Area (2026)
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