Distance to Growing Markets, Logistics Quality and Sub-Saharan African Exports

A typical person in sub-Saharan Africa is a long way from world markets. Moreover, they are further from world markets now than they were in 1980 due to shifts in the location of world production. This partly reflects slower growth within Africa than for the world as a whole. Yet despite slower growth in Africa, African exports have become increasingly regionalized. By 2005, a country in sub-Saharan Africa typically exported twice as much to a country in their own region, after accounting for economic size and bilateral distance. This regionalisation was not present in the early 1980s and has become stronger over time. We find evidence of positive neighbourhood effects through exports. Using country-pair fixed effects in a gravity equation we estimate that, for a typical country pair, one per cent trading partner growth increases bilateral exports to that country by about 0.8 per cent. We find evidence that sub-Saharan countries may benefit less from growth in their own region than this typical relationship suggests. Countries may also benefit from changes in the logistics performance of their trading partners. We find that the impact of logistics performance on exports is economically and statistically significant for both own and trading partner logistics performance.