Growth and Regional Trade in Africa: Some Empirical Evidence

The formation of regional trade agreements among countries at different levels of economic development poses the question of whether the composition of trade, rather than trade itself, is relevant for growth. This question has not been thoroughly and conclusively investigated in the case of trade between developing countries. This paper analyzes the empirical relationship between growth and intra-African export trade as well as exports to other parts of the world as observed through an inter-country cross-section. A production function model is specified and estimated using cross-sectional data from Sub Saharan African countries for the period 1985-2010. The estimated results show that the trade ratios for aggregate exports, exports to HIC enter the growth equation positively and are statistically significant. The positive and significant coefficients of SSA-HIC export trade support the view that the SSA growth benefits more from trading with HIC (the North). On the other hand, the estimated coefficients of the intra-Africa exports and other exports to LDCs are negative or insignificant. This suggests that exports of SSA countries to other SSA or LDCs have played an insignificant role in the growth of SSA economies.The formation of regional trade agreements among countries at different levels of economic development poses the question of whether the composition of trade, rather than trade itself, is relevant for growth (Splimbergo, 2000). This question has not been thoroughly and conclusively investigated, especially for trade between developing countries. This paper analyzes the empirical relationship between growth and intra-African trade as observed through an inter-country cross-section. A production function model is specified and estimated using cross-sectional data from 46 African countries for the period 1985-2005