Relating trade liberalisation and increased intra-African trade volume

Abstract

Introduction: Trade liberalisation in Sub-Saharan Africa (SSA) has long been considered as a catalyst for increasing intra-African trade. This study delves into the variables of trade liberalisation, and explores the individual, and interconnected effects it has on intra-African trade volume. Methodology: The research employed three established econometric techniques: Generalized Method of Moments (GMM), system GMM, and Fixed Effects Model, to ensure robustness of the findings. These methods are applied to a comprehensive panel dataset, encompassing 10 randomly selected SSA countries, spanning a decade (2010 – 2019). Findings: The analysis reveals that, while trade liberalisation exerts a positive effect on increasing intra-African trade volume, most of the variables comprising trade liberalisation lack statistical significance. Notably, the research underscores the statistically significant, and positive effect of a country's previous intra-African trade performance on augmenting intra-African trade volume. This outcome supports the prevailing view that, the gains of trade liberalisation materialise in the medium to long term. Implications: These findings bear particular relevance in the context of the AfCFTA, underscoring the importance of ongoing trade liberalisation efforts among its signatory nations. This research sheds light on areas where future policy interventions and trade facilitation measures can be refined to harness the full potential of intra-African trade