Africa’s economic regionalism: is there any other obstacle?

Abstract

Purpose

The purpose of this paper is to extend the gravity model to examine the role of infrastructure (including human capital (HC)), macroeconomic policies, the institutional quality and the colonial regimes on intra-African trade during the period 1990-2013. The results show that the basic gravity variables have substantial influence on the bilateral trade in the continent. Most interestingly, whilst internal conflicts appear to have harmful and significant impacts on the flow of such trade, HC, the flow of foreign direct investment (FDI) and the British colonial regime appear as encouraging factors. The results of the study imply that devoting more resources to HC and creating a favourable investment environment should come as a top priority in current efforts to facilitate Africa’s economic regionalism.

Design/methodology/approach

The paper employs Tobit technique on a semi-log extended form for the gravity model.

Findings

The results show that the basic gravity variables have substantial influence on the bilateral trade in the continent. Most interestingly, whilst internal conflicts appear to have harmful and significant impacts on the flow of such trade; HC, the flow of FDI and the British colonial regime come out as encouraging factors.

Originality/value

The results provided can be useful to design policies oriented to facilities intra-trade between African economies. So far, this is the first study that incorporates the soft type of infrastructures, colonization and institutional quality in the investigation of the factors that can influence intra-Africa trade.

Citation

Awad, A. and Yussof, I. (2017), "Africa’s economic regionalism: is there any other obstacle?", Journal of Economic Studies, Vol. 44 No. 3, pp. 344-361. https://doi.org/10.1108/JES-02-2016-0039