Is Regional Trade Integration a Growth and Convergence Engine in Africa?

January 29, 2021

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Vigninou Gammadigbe. Is Regional Trade Integration a Growth and Convergence Engine in Africa?, (USA: International Monetary Fund, 2021) accessed November 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

The main objective of Regional Trade Agreements (RTAs) is to stimulate economic growth in participating countries through increased trade, economies of scale, knowledge and technology transfer. Using a panel data over the period 1979 to 2018, this paper examines the contribution of regional trade integration (RTI) to economic growth and income convergence in Africa and its major Regional Economic Communities (RECs). The results of the instrumental variable and panel fixed-effects estimation show that RTI promotes economic growth in Africa. However, it fosters income divergence, reflecting the distribution of the gains from regional integration in favor of the more developed economies of the continent. The results of this study show the importance to support the African Continental Free Trade Area (AfCFTA) project with policies aimed at reducing non-tariff barriers to trade and improving infrastructure in order to maximize the effects on growth in all participating countries.

Subject: Economic integration, Personal income, Plurilateral trade, Regional integration, Trade integration

Keywords: Africa, Bilateral trade intensity, Country pair, Economic growth, Further trade integration, Growth rate, Income convergence, Trade integration indicator, Trade intensity, Trade openness, Trade openness of the country pair, Trade statistics, WP

Publication Details

Pages:

39
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2021/019
Stock No:

WPIEA2021019
ISBN:

9781513567716
ISSN:

1018-5941

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