The effects of non‐trade non‐rent barriers on intra‐Africa trade

Abstract

AbstractThis article evaluates the effects of non‐trade non‐rent barriers to intra‐Africa trade. Specifically, the effects of improved productivity, improved capital inflows, share of employment in non‐agricultural sectors, and ratio of rural population. We seek to investigate the impact of institutional strength measured by property rights, rule of law and control of corruption, different exchange rate regimes on the impact of the non‐trade non‐rent variables on intra‐Africa trade. We use an extensive dataset of 25 countries, by picking the most diverse and high‐income economies in each region, for the period 2000–2020 using annual data. The empirical analysis involves a linear panel analysis with a fixed effects estimator. The study provides evidence that level of labor productivity is a key factor in the growth of intra‐Africa imports and exports, the share of employment in the wholesale and services sector also has a significantly positive impact, exchange rate regimes play a magnifying role, and strong institutions (regulatory quality, rule of law and low corruption) will enhance the benefits to be drawn for increased income flows.