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South-South Trade: Geography Matters

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  • Souleymane COULIBALY
  • Lionel FONTAGNÉ

Abstract

Intra-subsaharan African trade appears to be very low, an outcome that is often attributed to the size of the exporting and the importing economies. If that were the explanation, there would be no untapped trade potential. We argue instead that the main determinants of this "missing trade" are geographical and infrastructure-related impediments. Being landlocked and poor translates into high trade costs. In this paper, we try to measure the impact of geographical impediments on South-South trade. We focus on the intra and extra-regional trade of the countries belonging to the West African Economic and Monetary Union. We use an Armington-based model in order to evaluate the impact of geographical and infrastructure-related impediments on bilateral trade flows within this region. We find two main results: paving all inter-state roads would increase trade by a factor of 3, and crossing a transit country reduces intra-bilateral trade flows by 6%, ceteris paribus.

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Bibliographic Info

Paper provided by Université de Lausanne, Faculté des HEC, DEEP in its series Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) with number 04.07.

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Length: 34 pages
Date of creation: May 2004
Date of revision:
Publication status: Published in Journal of African Economies, vol. 15 (2), June 2006, pp.313-341
Handle: RePEc:lau:crdeep:04.07

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Postal: Université de Lausanne, Faculté des HEC, DEEP, Internef, CH-1015 Lausanne
Phone: ++41 21 692.33.64
Fax: ++41 21 692.33.05
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Web page: http://www.hec.unil.ch/deep/publications/cahiers/series
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Keywords: South-South trade; landlocked; transport infrastructure; border infrastructure;

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References

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  1. Keith Head & Thierry Mayer, 2000. "Non-Europe: The magnitude and causes of market fragmentation in the EU," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 136(2), pages 284-314, June.
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  4. Limao, Nuno & Venables, Anthony J., 1999. "Infrastructure, geographical disadvantage, and transport costs," Policy Research Working Paper Series 2257, The World Bank.
  5. Foroutan, Faezeh & Pritchett, Lant, 1993. "Intra - Sub - Saharan African trade : is it too little?," Policy Research Working Paper Series 1225, The World Bank.
  6. Jeffrey D. Sachs, 2001. "Tropical Underdevelopment," NBER Working Papers 8119, National Bureau of Economic Research, Inc.
  7. J. Vernon Henderson, Zmarak Shalizi, and Anthony J. Venables, 2001. "Geography and development," Journal of Economic Geography, Oxford University Press, vol. 1(1), pages 81-105, January.
  8. Lionel Fontagné & Michaël Freudenberg & Nicolas Peridy, 1997. "Trade Patterns Inside the Single Market," Working Papers 1997-07, CEPII research center.
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  10. A. Bénassy-Quéré & Maylis Coupet, 2003. "On the Adequacy of Monetary Arrangements in Sub-Saharian Africa," THEMA Working Papers 2003-38, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  11. Havrylyshyn, Oli, 1985. "The direction of developing country trade : Empirical evidence of differences between South-South and South-North trade," Journal of Development Economics, Elsevier, vol. 19(3), pages 255-281, December.
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Cited by:
  1. Athukorala, Prema-Chandra, 2011. "South-South Trade: An Asian Perspective," ADB Economics Working Paper Series 265, Asian Development Bank.
  2. Diagne, Mandiaye & Abele, Steffen & Diagne, Aliou & Seck, Papa Abdoulaye, 2012. "Agricultural trade for food security in Africa: A Ricardian model approach," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 123842, International Association of Agricultural Economists.
  3. Mustafizur Rahman & Wasel Bin Shadat & Narayan Chandra Das, 2006. "Trade Potential in SAFTA - An Application of Augmented Gravity Model," Trade Working Papers 22296, East Asian Bureau of Economic Research.
  4. Souleymane COULIBALY, 2006. "Persistent Uneven Spread of Economic Activities within Developing RIAs," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 06.01, Université de Lausanne, Faculté des HEC, DEEP.
  5. de Melo, Jaime & Tsikata, Yvonne, 2014. "Regional integration in Africa: Challenges and prospects," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  6. James Feyrer, 2009. "Distance, Trade, and Income – The 1967 to 1975 Closing of the Suez Canal as a Natural Experiment," NBER Working Papers 15557, National Bureau of Economic Research, Inc.
  7. Shepherd, Ben & Wilson, John S., 2006. "Road infrastructure in Europe and Central Asia : does network quality affect trade ?," Policy Research Working Paper Series 4104, The World Bank.
  8. Celbis, Mehmet Güney & Nijkamp, Peter & Poot, Jacques, 2013. "How big is the impact of infrastructure on trade? Evidence from meta-analysis," MERIT Working Papers 032, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  9. Villoria, Nelson, 2008. "Estimation of Missing Intra-African Trade," GTAP Research Memoranda 2915, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  10. Wim Naudé, 2011. "Economic Development in Sub-Saharan Africa: The Case of the Big Four," Working Papers 2011/34, Maastricht School of Management.
  11. James Feyrer, 2009. "Trade and Income -- Exploiting Time Series in Geography," NBER Working Papers 14910, National Bureau of Economic Research, Inc.

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