Is Human Rights Protection Good for Trade in Africa: Evidence from Proximity to Democratically ‘Good’ and ‘Bad’ Neighbouring Countries

We study whether institutions supportive of human rights improve trade openness. Strengthening human rights institutions could reduce the adverse consequence of trade on consumers and labour rights. On the other hand, adherence could impose high transaction costs limiting the comparative advantage of many African countries. We study the effect of democratic and human rights institutions on trade openness for 40 African countries from 1960 to 2010. To address endogeneity concerns, we exploit the variation in democracy measurement among geographically proximate neighbours with similar political histories (i.e. an inverse distanceweighted average of democracy among ‘neighbours’). We find that human rights and democratic institutions increase trade in Africa. We find evidence supporting property rights, freedom of domestic movement and the political recruitment process as likely mechanisms.