Orissa Feeney | Why Regionalism A Look At The Costs And Benefits Of Regional Trade Agreements In Africa
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Why Regionalism A Look At The Costs And Benefits Of Regional Trade Agreements In Africa

Why Regionalism A Look At The Costs And Benefits Of Regional Trade Agreements In Africa

However, the role of the RTA in the prevention and resolution of conflicts in Africa should not be overstated. First, while closer trade relations strengthen incentives for regional intervention in the event of conflict, ATRs that do not increase intra-regional trade will not make this intervention more likely. Indeed, in Africa, regional cooperation agreements that address cross-border resource issues (such as water) are more effective than trade-based ATRs (World Bank, 2004) in reducing military conflicts. Second, effective regional intervention requires regional agreements that go beyond trade. This suggests that some regional policy and cooperation agreements can be as effective as trade agreements to prevent and resolve conflicts. Moreover, a regional intervention is not effective without the broad support of the international community. An RTA that diverts trade from the rest of the world could do little to attract the attention of the rest of the world. The question arises as to whether African countries should prioritize investments in infrastructure that reduce transport costs for intra-regional trade or in infrastructure that supports extra-regional trade. For efficiency reasons, the decision should be based on the cost-benefit analysis. However, if the objective is to promote intra-regional trade, there is a second best argument for transport investment in intra-regional trade. Summary: Countries participated in regional trade agreements (RTA) long before the creation of the General Agreement on Tariffs and Trade (GATT) in 1947. However, in recent years, ATRs have multiplied, particularly in Africa. In this article, we examine the various reasons why African countries opted for these agreements, particularly in view of the fact that they do not seem to “create trade” ™ in nature.

As Jacob Viner popularized in the 1950s, not all trade agreements have led to greater economic well-being for the participating nations. In the case of African countries where products are little different and infrastructure and trade systems are designed for intercontinental rather than intracontinental trade, there is no need to increase the prosperity of ATRs. Our study of the RTA does not lead to a strong positive result, as these are exercises to promote social protection. Future ATRs will need to be given more consideration. A common market is a kind of trade agreement in which members remove internal trade barriers, adopt common policies on relations with non-members and allow members to move their resources freely among themselves. Econometric results should be interpreted with caution. The main difficulty in interpreting these results is to determine a counterfactual attribution to which the actual result can be compared. The factual counterfact implicitly adopted in the gravity model is a result determined by control variables. As Mr. O`Connell (1997) points out, trade policy (including for the RTA) is often endogenous in Africa: it is largely influenced by macroeconomic variables (. B, for example, the balance of payments and the exchange rate) and in turn affects the macro-economic positions of countries.

Beyond the problem of over-vegetatedness, specification errors in the gravity model can result in significant margins of error in taking into account the residual effect of ATRs. This problem could be compounded by the imprecision of African trade data.19 For the growing number of empirical literature on trade, growth and poverty, see Sachs and Warner (1995), Dollar and Kraay (2001), Berg and Krueger (2003), Baldwin (2003) and Panagariya (2004).

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