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Regional Integration Agreements and Rent-Seeking in Africa

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  • S. STANDAERT

    ()

  • G. RAYP

Abstract

This paper explores the motives behind the formation of intra-African regional integration agreements (RIAs). We aim to see whether rent-seeking can be identified as a statistically significant driving force of African integration. The traditional reason for economic integration, the static and dynamic effects, predict no or even a negative effect on welfare. Moreover, many of the new regionalism theories are conditional on strong economic integration. Two exceptions are rent-seeking behavior and the regime boosting hypothesis. Not only can they credibly explain the proliferation of African trade agreements in the absence of a positive effect on welfare, they can also account for the lack of progress in clearing away the many obstructions to regional trade. Because most African agreements involve more than two partner countries, the decision to enter a RIA cannot be analyzed by examining agreements between pairs of countries. Instead, we propose regressing whether a country is a member of a certain agreement on the characteristics of both country and agreement. We find that corruption does have an effect on the willingness to join RIAs, but that it is strongly dependent on the level of GDP. Moreover, for a given level of GDP the effect of corruption is non-linear.

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Bibliographic Info

Paper provided by Ghent University, Faculty of Economics and Business Administration in its series Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium with number 12/773.

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Length: 24 pages
Date of creation: Feb 2012
Date of revision:
Handle: RePEc:rug:rugwps:12/773

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Keywords: Regional Integration; Rent-seeking; Africa;

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  1. Mansfield, Edward D. & Milner, Helen V. & Rosendorff, B. Peter, 2002. "Why Democracies Cooperate More: Electoral Control and International Trade Agreements," International Organization, Cambridge University Press, vol. 56(03), pages 477-513, June.
  2. Emanuel Ornelas, 2005. "Rent Destruction and the Political Viability of Free Trade Agreements," The Quarterly Journal of Economics, MIT Press, vol. 120(4), pages 1475-1506, November.
  3. Grossman, G.M. & Helpman, E., 1992. "Protection for Sale," Papers 21-92, Tel Aviv.
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  5. Grossman, Gene & Helpman, Elhanan, 1994. "The Politics of Free Trade Agreements," CEPR Discussion Papers 908, C.E.P.R. Discussion Papers.
  6. Giovanni Maggi & Andres Rodriguez-Clare, 1998. "The Value of Trade Agreements in the Presence of Political Pressures," Journal of Political Economy, University of Chicago Press, vol. 106(3), pages 574-601, June.
  7. Baier, Scott L. & Bergstrand, Jeffrey H., 2004. "Economic determinants of free trade agreements," Journal of International Economics, Elsevier, vol. 64(1), pages 29-63, October.
  8. Céline Carrère, 2004. "African Regional Agreements: Impact on Trade with or without Currency Unions," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 13(2), pages 199-239, June.
  9. Nathan Nunn & Leonard Wantchekon, 2011. "The Slave Trade and the Origins of Mistrust in Africa," American Economic Review, American Economic Association, vol. 101(7), pages 3221-52, December.
  10. Baunsgaard, Thomas & Keen, Michael, 2010. "Tax revenue and (or?) trade liberalization," Journal of Public Economics, Elsevier, vol. 94(9-10), pages 563-577, October.
  11. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August.
  12. Cadot, Olivier & de Melo, Jaime & Olarreaga, Marcelo, 1999. "Asymmetric Regionalism in Sub-Saharan Africa: Where Do We Stand?," CEPR Discussion Papers 2299, C.E.P.R. Discussion Papers.
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