Trade Integration, Export Patterns, and Growth in Sub-Saharan Africa

This paper examines systematically the growth effects of trade integration in Sub-Saharan Africa. It complements and improves upon the empirical literature in two aspects: first, it jointly estimates the impact of different dimensions of trade integration, namely, trade volumes, export/trade patterns by product (primary and manufacturing goods), and by destination (inter- and intra-regional). Second, it estimates the impact of trade integration on economic growth and its sources, that is, capital accumulation and total factor productivity growth. The analysis finds causal evidence that trade integration fosters growth. Additionally, manufacturing trade boosts growth and trade in primary goods hampers growth. Doubling the manufacturing trade share in Sub-Saharan Africa's gross domestic product would increase growth by 1.9 percentage points per year, while increases in primary trade reduce growth by 1 percentage point. This impact is mainly transmitted through lower capital accumulation. Finally, inter- and intra-regional trade have a positive impact on growth in Sub-Saharan Africa. Doubling inter-regional trade will increase growth by 1.9 percentage points, and the same increase for intra-regional trade enhances growth by 0.6 percentage points. The effects of inter-regional trade are transmitted primarily through capital accumulation, while those of intra-regional trade are channeled through enhanced total factor productivity growth.