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South-South Trade: Geography Matters

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Author Info
Souleymane COULIBALY
Lionel FONTAGNÉ

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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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Publisher 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 21 692.33.65
Web page: http://www.hec.unil.ch/deep/publications-english/e-cahiers.htm

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Related research
Keywords: South-South trade; landlocked; transport infrastructure; border infrastructure;

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Find related papers by JEL classification:
F11 - International Economics - - Trade - - - Neoclassical Models of Trade
F15 - International Economics - - Trade - - - Economic Integration
O55 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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References listed on IDEAS
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  1. Foroutan, Faezeh & Pritchett, Lant, 1993. "Intra-sub-Saharan African Trade: Is It Too Little?," Journal of African Economies, Oxford University Press, vol. 2(1), pages 74-105, May.
    Other versions:
  2. Stephen Redding & Anthony J. Venables, 2001. "Economic Geography and International Inequality," International Trade 0103003, EconWPA. [Downloadable!]
    Other versions:
  3. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
    Other versions:
  4. Agnès Bénassy-Quéré & Maylis Coupet, 2005. "On the Adequacy of Monetary Arrangements in Sub-Saharan Africa," The World Economy, Blackwell Publishing, vol. 28(3), pages 349-373, 03. [Downloadable!] (restricted)
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  5. Greenaway, David & Milner, Chris R, 1990. "South-South Trade: Theory, Evidence, Policy," World Bank Research Observer, Oxford University Press, vol. 5(1), pages 47-68, January.
  6. 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.
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  7. Lionel Fontagne & Michael Freudenberg & Nicholas Peridy, 1997. "Trade Patterns Inside the Single Market," Working Papers 1997-07, CEPII research center. [Downloadable!]
  8. 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. [Downloadable!] (restricted)
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  9. Jeffrey D. Sachs, 2001. "Tropical Underdevelopment," NBER Working Papers 8119, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  10. 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. [Downloadable!] (restricted)
  11. Limao, Nuno & Venables, Anthony J., 1999. "Infrastructure, geographical disadvantage, and transport costs," Policy Research Working Paper Series 2257, The World Bank. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. 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. [Downloadable!]
  2. 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. [Downloadable!]
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