IDEAS home Printed from https://ideas.repec.org/a/bla/afrdev/v35y2023i1p65-78.html
   My bibliography  Save this article

The effect of the informal economy on bilateral exports from sub‐Saharan African countries

Author

Listed:
  • Boker Poumie
  • Edmond Noubissi Domguia
  • Borice Augustin Ngounou
  • Thierry Messie Pondie
  • Joseph Nzomo Tcheuta

Abstract

The purpose of this study is to analyse the impact of the informal economy on bilateral exports in sub‐Saharan African countries. We use a gravity model, to which we add indicators of the informal economy and indicator variables for different economic regions. The study used Pseudo‐Poisson Maximum Likelihood (PPML) and Heckman estimation techniques on data from the period 2002–2018. The results show that the informal economy has a negative impact on bilateral inter‐community exports and a positive impact on bilateral intra‐community exports. These results thus support the idea that the informal economy can accelerate the integration of regional economic communities and ultimately facilitate the establishment of bilateral export free trade areas at the continental level.

Suggested Citation

  • Boker Poumie & Edmond Noubissi Domguia & Borice Augustin Ngounou & Thierry Messie Pondie & Joseph Nzomo Tcheuta, 2023. "The effect of the informal economy on bilateral exports from sub‐Saharan African countries," African Development Review, African Development Bank, vol. 35(1), pages 65-78, March.
    • Handle: RePEc:bla:afrdev:v:35:y:2023:i:1:p:65-78
    DOI: 10.1111/1467-8268.12685
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/1467-8268.12685
    Download Restriction: no
    File URL: https://libkey.io/10.1111/1467-8268.12685?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Marco Fugazza & Alain McLaren, 2014. "Market Access, Export Performance and Survival: Evidence from Peruvian Firms," Review of International Economics, Wiley Blackwell, vol. 22(3), pages 599-624, August.
    2. Leandro Medina & Mr. Friedrich Schneider, 2018. "Shadow Economies Around the World: What Did We Learn Over the Last 20 Years?," IMF Working Papers 2018/017, International Monetary Fund.
    3. Edmond Noubissi & Boker Poumie & Hilaire Nkengfack, 2021. "Effect of environmental policies on exports from sub‐Saharan African countries," African Development Review, African Development Bank, vol. 33(4), pages 688-702, December.
    4. Ogunkola, E.O., 1998. "An Empirical Evaluation of Trade Potential in the Economic Community of West African States," Papers 84, African Economic Research Consortium.
    5. Koujianou Goldberg, Pinelopi & Pavcnik, Nina, 2003. "The response of the informal sector to trade liberalization," Journal of Development Economics, Elsevier, vol. 72(2), pages 463-496, December.
    6. Sami Bensassi & Joachim Jarreau & Cristina Mitaritonna, 2019. "Regional Integration and Informal Trade in Africa: Evidence from Benin’s Borders," Journal of African Economies, Centre for the Study of African Economies, vol. 28(1), pages 89-118.
    7. Evans S. Osabuohien & Uchenna R. Efobi & John T. Odebiyi & Oluyemi O. Fayomi & Adeleke O. Salami, 2019. "Bilateral Trade Performance in West Africa: A Gravity Model Estimation," African Development Review, African Development Bank, vol. 31(1), pages 1-14, March.
    8. Martin, Will & Pham, Cong S., 2008. "Estimating the gravity model when zero trade flows are frequent," Working Papers eco_2008_03, Deakin University, Department of Economics.
    9. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    10. Baldwin, Richard, 2007. "Trade Effects of the Euro: a Comparison of Estimators," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 22, pages 780-818.
    11. Uduak Akpan, 2014. "Impact of Regional Road Infrastructure Improvement on Intra-Regional Trade in ECOWAS," African Development Review, African Development Bank, vol. 26(S1), pages 64-76, November.
    12. Rafael La Porta & Andrei Shleifer, 2008. "The Unofficial Economy and Economic Development," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 39(2 (Fall)), pages 275-363.
    13. Bosch, Mariano & Goni, Edwin & Maloney, William, 2007. "The determinants of rising informality in Brazil : Evidence from gross worker flows," Policy Research Working Paper Series 4375, The World Bank.
    14. Jacob Wanjala Musila, 2005. "The Intensity of Trade Creation and Trade Diversion in COMESA, ECCAS and ECOWAS: A Comparative Analysis," Journal of African Economies, Centre for the Study of African Economies, vol. 14(1), pages 117-141, March.
    15. Céline Carrère, 2004. "African Regional Agreements: Impact on Trade with or without Currency Unions," Journal of African Economies, Centre for the Study of African Economies, vol. 13(2), pages 199-239, June.
    16. Cristina Mitaritonna & Sami Bensassi & Joachim Jarreau, 2017. "Regional Integration and Informal Trade in Africa: Evidence from Benin's Borders," Working Papers 2017-21, CEPII research center.
    17. Baltagi, Badi H. & Egger, Peter & Pfaffermayr, Michael, 2003. "A generalized design for bilateral trade flow models," Economics Letters, Elsevier, vol. 80(3), pages 391-397, September.
    18. Sylvanus Kwaku Afesorgbor, 2019. "Regional Integration, Bilateral Diplomacy and African Trade: Evidence from the Gravity Model," African Development Review, African Development Bank, vol. 31(4), pages 492-505, December.
    19. Tamás Krisztin & Manfred M. Fischer, 2015. "The Gravity Model for International Trade: Specification and Estimation Issues," Spatial Economic Analysis, Taylor & Francis Journals, vol. 10(4), pages 451-470, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Edmond Noubissi & Boker Poumie & Hilaire Nkengfack, 2021. "Effect of environmental policies on exports from sub‐Saharan African countries," African Development Review, African Development Bank, vol. 33(4), pages 688-702, December.
    2. Fabien Candau & Geoffroy Guepie & Reine Kouakou, 2018. "In Gravity no Veritas: Dubious Trade Elasticiy and Weak Effects of Regional Trade Agreements in Africa," Working Papers hal-02625930, HAL.
    3. Silviano Esteve-Pérez & Salvador Gil-Pareja & Rafael Llorca-Vivero, 2020. "Does the GATT/WTO promote trade? After all, Rose was right," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 156(2), pages 377-405, May.
    4. Kareem, Fatima Olanike & Martinez-Zarzoso, Inmaculada & Brümmer, Bernhard, 2016. "Fitting the Gravity Model when Zero Trade Flows are Frequent: a Comparison of Estimation Techniques using Africa's Trade Data," GlobalFood Discussion Papers 230588, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    5. Jana Riedel & Anja Slany, 2019. "The potential of African trade integration – Panel data evidence for the COMESA-EAC-SADC Tripartite," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 28(7), pages 843-872, October.
    6. Sylvanus Kwaku Afesorgbor, 2013. "Revisiting the Effectiveness of African Economic Integration. A Meta-Analytic Review and Comparative Estimation Methods," Economics Working Papers 2013-13, Department of Economics and Business Economics, Aarhus University.
    7. Shumilov, Andrei, 2017. "Оценивание Гравитационных Моделей Международной Торговли: Обзор Основных Подходов [Estimating gravity models of international trade: a survey of methods]," MPRA Paper 79790, University Library of Munich, Germany.
    8. Silviano Esteve‐Pérez & Salvador Gil‐Pareja & Rafael Llorca‐Vivero & José Antonio Martínez‐Serrano, 2020. "EMU and trade: A PPML re‐assessment with intra‐national trade flows," The World Economy, Wiley Blackwell, vol. 43(10), pages 2574-2599, October.
    9. Beniamino Quintieri & Giovanni Stamato, 2023. "Are preferential agreements beneficial to EU trade? New evidence from the EU–South Korea treaty," The World Economy, Wiley Blackwell, vol. 46(12), pages 3511-3541, December.
    10. Claire Brunel & Thomas Zylkin, 2022. "Do cross‐border patents promote trade?," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 55(1), pages 379-418, February.
    11. Koffi Dumor & Yao Li & Ma Yongkai & Enock Mintah Ampaw & Hafez Komla Dumor, 2022. "Evaluating the belt and road initiative effects on trade and migration: Evidence from the East African community," African Development Review, African Development Bank, vol. 34(1), pages 16-28, March.
    12. William W. Olney, 2022. "Intra-African trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 158(1), pages 25-51, February.
    13. Ederington, Josh & Paraschiv, Mihai & Zanardi, Maurizio, 2022. "The short and long-run effects of international environmental agreements on trade," Journal of International Economics, Elsevier, vol. 139(C).
    14. Suárez-Varela, Marta & Rodríguez-Crespo, Ernesto, 2022. "Is dirty trade concentrating in more polluting countries? Evidence from Africa," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 728-744.
    15. Sebil Olalekan Oshota & Bashir Adelowo Wahab, 2022. "Institutional Quality and Intra-Regional Trade Flows: Evidence from ECOWAS," Journal of African Trade, Springer, vol. 9(1), pages 73-106, December.
    16. Prodyumna Goutam & Italo A. Gutierrez & Krishna B. Kumar & Shanthi Nataraj, 2017. "Does Informal Employment Respond to Growth Opportunities? Trade-Based Evidence from Bangladesh," Working Papers 1198, RAND Corporation.
    17. Tamaş Anca, 2020. "Why should the gravity model be taught in business education?," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 14(1), pages 422-433, July.
    18. Jade Siu, 2020. "Formalising informal cross-border trade: Evidence from One-Stop-Border-Posts in Uganda," Discussion Papers 20-08, Department of Economics, University of Birmingham.
    19. Thomas Kopp & Sören Prehn & Bernhard Brümmer, 2016. "Preference Erosion – The Case of Everything But Arms and Sugar," The World Economy, Wiley Blackwell, vol. 39(9), pages 1339-1359, September.
    20. Zongo, Amara, 2021. "The impact of services trade restrictiveness on food trade," International Economics, Elsevier, vol. 166(C), pages 71-94.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:afrdev:v:35:y:2023:i:1:p:65-78. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/afdbgci.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.