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Exporting to fragile states in Africa: Firm‐level evidence

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  • Peter Wankuru Chacha
  • Lawrence Edwards

Abstract

This study analyses the effect of fragility in destination markets on firm export behavior and the role of firm size in mediating adverse outcomes. The analysis is conducted using firm transaction data on Kenyan exports to Africa over the period 2004–2013. The analysis reveals that fragility negatively affects a firm's decision to enter a given destination market, reducing Kenya's bilateral trade flows to African countries. Larger firms are more resilient to destination shocks in fragility and are less likely to exit. These results are robust to alternative measures of destination fragility, and the exclusion of bordering countries and the East African Community partner states. Our analysis reveals that the effect of business fragility (regulatory quality, government effectiveness, and control of corruption) dominates that of political fragility (voice and accountability, rule of law, and political stability), although both effects are negative and significant.

Suggested Citation

  • Peter Wankuru Chacha & Lawrence Edwards, 2019. "Exporting to fragile states in Africa: Firm‐level evidence," Review of Development Economics, Wiley Blackwell, vol. 23(3), pages 1177-1201, August.
    • Handle: RePEc:bla:rdevec:v:23:y:2019:i:3:p:1177-1201
    DOI: 10.1111/rode.12408
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    Cited by:

    1. Anderton Charles H. & Anderton Roxane A., 2021. "The Trade Disruption Hypothesis Fails for State-Sponsored Genocides and Mass Atrocities: Why It Matters," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 27(2), pages 143-168, May.
    2. Abdikarim Bashir Jama, 2020. "The Effect of Institutional Quality on Export performance of Middle East & North-Africa Region," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 4(1), pages 14-20, January.

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