IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/121436.html
   My bibliography  Save this paper

Intra-African Trade and Macroeconomic Performance of Africa: Implications for the African Continental Free Trade Area

Author

Listed:
  • Aliyu, Shehu Usman Rano

Abstract

The study investigates the influence of intra-African trade on Africa's macroeconomic performance. To mitigate potential biases, the paper employs a two-step estimation technique (2SLS). In the first step, the paper uses Poisson pseudo maximum likelihood (PPML) to estimate the gravity model for intra-African trade. In the second step, the paper uses the 2SLS instrumental variable (IV) estimator to estimate the macroeconomic models. The paper fills a gap in the literature by considering macroeconomic indicators that were previously overlooked, such as inflation, financial market development, and human capital development. In addition to the commonly considered factor, real GDP per capita, the study also captures recent periods between 1990 and 2022. Findings based on the PPML model show that in addition to the real GDP per capita and regional trade agreements (RTAs), the distance between importing and exporting countries, though counterintuitive, significantly affects intra-African trade, whereas sharing the same colonial history and speaking the same language do not necessarily increase trade in the continent. Further, the 2SLS estimates show that intra-African trade exerts a robust positive impact on Africa's GDP per capita, has a modest effect on financial market development, and dampens inflation over the study period. Accordingly, the paper underscores the need for effective implementation of the African Continental Free Trade Area (AfCFTA protocols) to realise the full potential impact of intra-African trade on income, financial development, and reduced inflation in the continent in the medium to long term.

Suggested Citation

  • Aliyu, Shehu Usman Rano, 2024. "Intra-African Trade and Macroeconomic Performance of Africa: Implications for the African Continental Free Trade Area," MPRA Paper 121436, University Library of Munich, Germany, revised 22 Jun 2024.
  • Handle: RePEc:pra:mprapa:121436
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/121436/1/MPRA_paper_121436.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    AfCFTA; intra-African trade; macroeconomic performance; Poisson pseudo maximum likelihood (PPML); 2SLS instrumental variable (IV) estimator;
    All these keywords.

    JEL classification:

    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

    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:pra:mprapa:121436. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.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.