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South-South Trade: Geography Matters

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  • Souleymane COULIBALY
  • Lionel FONTAGNÉ

Abstract

Intra-subsaharan African trade appears to be very low, an outcome that is often attributed to the size of the exporting and the importing economies. If that were the explanation, there would be no untapped trade potential. We argue instead that the main determinants of this "missing trade" are geographical and infrastructure-related impediments. Being landlocked and poor translates into high trade costs. In this paper, we try to measure the impact of geographical impediments on South-South trade. We focus on the intra and extra-regional trade of the countries belonging to the West African Economic and Monetary Union. We use an Armington-based model in order to evaluate the impact of geographical and infrastructure-related impediments on bilateral trade flows within this region. We find two main results: paving all inter-state roads would increase trade by a factor of 3, and crossing a transit country reduces intra-bilateral trade flows by 6%, ceteris paribus.

Suggested Citation

  • Souleymane COULIBALY & Lionel FONTAGNÉ, 2004. "South-South Trade: Geography Matters," Cahiers de Recherches Economiques du Département d'économie 04.07, Université de Lausanne, Faculté des HEC, Département d’économie.
    • Handle: RePEc:lau:crdeep:04.07
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    More about this item

    Keywords

    South-South trade; landlocked; transport infrastructure; border infrastructure;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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