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AEC 2012 - Does Intra-Africa Regional Trade Cooperation Enhance Export Survival

16-Oct-2012

Sustainable export expansion is a key priority for all African countries to achieve sustainable economic growth. In this paper, I examine effects of intra‐regional trade cooperation on sustainability of Africa’s exports (export survival) within Africa and to the rest of the world. I also use a stratified Cox Proportional Hazard Model to econometrically evaluate the effects of a variety of trade costs, policy shocks, and export experience on the duration of export relationships for 53 African countries for the period 1995 to 2009. Results suggest that: (i) regional trade cooperation (integration) initiatives in Africa have non‐ negligible effects on enhancing Africa’s export survival.  The results also show that the depth of regional integration matters on lowering Africa’s export hazard rates relative to countries that are not in any regional cooperation. Secondly, the interaction effects between regional integration and a variety of trade costs shows, for instance; costs to export, time to export and customs procedures effects on hazard rates diminish with the depth of regional integration over time; and  (ii) factors such as costs to export, transit delays (time to export), procedures to export, financial depth and  institutional and policy biases against exports provide a natural framework for explaining the observable high hazard rates for African exports. These factors increase the probability of export failure in all African regional groups. Finally, I find that exporting experience to the regional markets significantly reduces African exports hazard rates.  

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