The impact of SADC regionalisation on intra-SADC trade

Abstract

The subject of international trade is as old as the human race. Countries have always needed goods they were unable to produce either because of lack of resources, lack of skills or just cost related constraints. On the other hand, countries have at one time or the other been able to produce more goods and services than they can consume. This situation led to people buying goods and services across national boundaries. As long as people have inhabited the earth, they have been engaging in some form of trading. As the world evolved through civilisation, countries continued to exchange goods and services across borders. Goods and services can be exchanged for a price between two countries, a few countries in a region, countries in a continent and even all countries in the world. The world multilateral trading system celebrated 60 years in operation in 2006. By this time over 55% of world trade was happening through Regional Trade Agreements with the European Union leading the way. Over 70% of trade in the European Union happens within the region. In the meanwhile, the South African Development Community (SADC) only conducts about 9% of its total trade within the region. Against this background, SADC agreed to a Trade Protocol in 2000 with the objective of deepening regional economic integration. Amongst the objectives of the SADC Trade Protocol was to increase levels of exports and imports within SADC. This study looks at the impact of these regional economic integration efforts on intra-SADC trade. The study examines if the SADC intra-regional trade behaves in a consistent manner with economic theory, global trade trends and other regional formations of economic integration.