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Trade growth under the African growth and opportunity act

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  • Frazer, Garth
  • Van Biesebroeck, Johannes

Abstract

This paper explores whether one of the most important U.S. policies towards Africa of the past few decades achieved its desired result. In 2000, the United States dropped trade restrictions on a broad list of products through the African Growth and Opportunity Act (AGOA). Since the Act was applied to both countries and products, we estimate the impact with a triple difference-in-differences estimation, controlling for both country and product-level import surges at the time of onset. This approach allows us to better address the "endogeneity of policy" critique of standard difference-in-differences estimation than if either a country or a product-level analysis was performed separately. Despite the fact that the AGOA product list as chosen to not include "import-sensitive" products, and despite the general challenges of transaction costs in African countries, we find that AGOA has a large and robust impact on apparel imports into the U.S., as well as on the agricultural and manufactured products covered by AGOA. These import responses grew over time and were the largest in product categories where the tariffs removed were large. AGOA did not result in a decrease in exports to Europe in these product categories, suggesting that the U.S.-AGOA imports were not merely diverted from elsewhere. We discuss how the effects vary across countries and the implications of these findings for aggregate export

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Paper provided by Katholieke Universiteit Leuven in its series Open Access publications from Katholieke Universiteit Leuven with number urn:hdl:123456789/253794.

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Date of creation: 2007
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Handle: RePEc:ner:leuven:urn:hdl:123456789/253794

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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Did AGOA work? Identification and export incentives
    by jdingel in Trade diversion on 2010-08-15 14:55:38
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Cited by:
  1. Pierre-Louis Vezina & Lorenzo Rotunno & Zheng Wang, 2012. "The rise and fall of (Chinese) African apparel exports," Economics Series Working Papers WPS/2012-12, University of Oxford, Department of Economics.
  2. De Sousa, Jose & Mayer, Thierry & Zignago, Soledad, 2011. "Market access in global and regional trade," MPRA Paper 35602, University Library of Munich, Germany.
  3. Irene Brambilla & Amit K. Khandelwal & Peter K. Schott, 2010. "China's Experience under the Multi-Fiber Arrangement (MFA) and the Agreement on Textiles and Clothing (ATC)," NBER Chapters, in: China's Growing Role in World Trade, pages 345-387 National Bureau of Economic Research, Inc.
  4. Nicolas Berman, Mathieu Couttenier, 2012. "External shocks, internal shots - the geography of civil conflicts," IHEID Working Papers 13-2012, Economics Section, The Graduate Institute of International Studies.
  5. Behar, Alberto & Edwards, Lawrence, 2011. "How integrated is SADC ? trends in intra-regional and extra-regional trade flows and policy," Policy Research Working Paper Series 5625, The World Bank.
  6. Cooke, Edgar F A, 2011. "The impact of trade preferences on exports of developing countries: the case of the AGOA and CBI preferences of the USA," MPRA Paper 31439, University Library of Munich, Germany.
  7. Cooke, Edgar F. A., 2012. "Is the impact of AGOA heterogeneous?," MPRA Paper 43277, University Library of Munich, Germany.
  8. Oliver Morrissey, & Evious Zgovu, . "The Impact of Economic Partnership Agreements on ACP Agriculture Imports and Welfare," Discussion Papers 07/09, University of Nottingham, CREDIT.
  9. Edwards, Lawrence & Lawrence, Robert Z., 2011. "AGOA Rules: The Intended and Unintended Consequences of Special Fabric Provisions," Working Paper Series rwp11-002, Harvard University, John F. Kennedy School of Government.
  10. Frankel, Jeffrey, 2010. "Mauritius: African Success Story," Working Paper Series rwp10-036, Harvard University, John F. Kennedy School of Government.
  11. Giorgia Giovannetti & Marco Sanfilippo, 2009. "Do Chinese Exports Crowd-out African Goods? An Econometric Analysis by Country and Sector," The European Journal of Development Research, Palgrave Macmillan, vol. 21(4), pages 506-530, September.
  12. Morrissey, Oliver & Zgovu, Evious, 2008. "The Impact of Economic Partnership Agreements on African, Caribbean and Pacific Countries Imports and Welfare," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44205, European Association of Agricultural Economists.
  13. Cooke, Edgar F. A., 2011. "A matching approach to study the impact of agoa on Sub-Saharan African countries," MPRA Paper 34670, University Library of Munich, Germany.

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