Trade Agreements and Bilateral Trade in Sub-Saharan Africa: Estimating the Trade Effects of the EU-ACP PTA and RTAs

Festus Turkson

Discussion Papers from University of Nottingham, CREDIT

Abstract: This paper on Trade Agreements within SSA, is an assessment of the ex post bilateral trade effect of the European Union-African Caribbean Pacific Preferential Trade Agreement (EU-ACP PTA) and sub-regional regional trade agreements (RTAs) on bilateral trade involving SSA countries. The main objective is to find out if EU trade preferences and regional trade agreements within SSA had increased trade flows. Estimating a gravity model augmented with measures of trade agreements, the paper made use of bilateral trade flows and key gravity covariates from CEPII database on 73 countries (48 SSA and 25 EU countries) over the period 1960-2006. After controlling for the endogeneity of the trade agreement dummy, accounting for multilateral price resistance and zero-valued trade flows, the findings indicate that the EU-ACP PTA and RTAs within ECOWAS and SADC have a positive and significant impact on bilateral trade involving SSA countries. In some cases the relative impact of the sub-regional RTAs was found to be stronger than the EU-ACP non-reciprocal PTA. The results therefore indicate the need for developing countries especially within SSA to focus on expanding and integrating regional markets in order to significantly improve trade performance.

Keywords: Trade Costs; Gravity Model; Bilateral Exports; International Trade; Domestic Trade; Developing Countries; Sub-Saharan Africa (search for similar items in EconPapers)
JEL-codes: F10 F13 F14 O55 O57 (search for similar items in EconPapers)
Date: 2012-07
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:not:notcre:12/07

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