Regional Integration and Trade in Africa

Author(s)

Geraude Fortune M. KOUNDE , Philip Agyei PEPRAH , Yao HONGXING ,

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Volume 8 - March 2019 (03)

Abstract

The aim of this paper is to examine the potential for intra-Africa trade and the effect of regional economic integration on economic development through such trade. In Africa, the intra-regional trade is less as compared to the other trading blocks of Asia and Europe. The study finds out the main factors of low intra-regional trade by selecting four major economic communities in Africa namely COMESA, ECOWAS, IGAD, and SADC. The study applied the traditional gravity model of Anderson-van Wincoop in panel data. The gravity model variables are Gross Domestic Product GDP, bilateral real exchange rate, population, common language, common colonizer and distance. These variables are found to be very important factors for regional trade flows in Africa. The result shows that REC’s impact on the bilateral trade. ECOWAS and SADC have a significant impact and have increased the bilateral trade among their countries members, COMESA has an insignificant coefficient impact on bilateral trade between the member’s states and IGAD also has an insignificant but positive coefficient impact on the regional trade integration flows.

Keywords

Regional Integration Trade, Economic Integration, Gravity Model, Africa

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