IDEAS home Printed from https://ideas.repec.org/a/adi/ijbess/v6y2024i3p138-149.html

An empirical analysis of challenges of implementing AfCFTA on South Africa’s trade in the SADC region: evidence using the PPML Estimation Technique

Author

Listed:
  • Ngonidzashe Chiranga

    (Tshwane University of Technology (TUT))

  • Teboho J. Mosikari

    (North-West University (NWU))

  • Mulatu F. Zerihun

    (Tshwane University of Technology (TUT))

Abstract

Intra-SADC trade has not met the target that was set by the African Continental Trade Agreement (AfCFTA) of achieving 22% by the year 2022 due to a myriad of various trade-related challenges. This present study aims to compare the results of using a Poisson Maximum Likelihood Estimator (PPML) with Random Effects (RE), Fixed Effects (FE), and an Ordinary Least Squares (POLS) model on a balanced panel of select eight Southern African Development Community (SADC) members that trade with South Africa over the period 2010-2022. The paper empirically examines how South Africa’s overlapping Regional Economic Community (REC) membership affects bilateral trade. Also, the examination of how the impact of distance between South Africa and its trading partners impacts bilateral trade. The study findings are that PPML provides more robust results than other estimation techniques in estimating the gravity model for a balanced micro panel. From the PPML results, distance has a significant negative impact at a 5% level on bilateral exports from South Africa which implies that SADC countries that are relatively far in terms of distance from South Africa and landlocked tend to experience a relative fall in exports from South Africa. However, multiple REC membership has a positive and significant impact of 1% level of significance on bilateral trade contrary to the negative relationship that was expected. The study recommends the speedy conclusion of outstanding AfCFTA issues for member states to effectively benefit from the economies that economic geography presents.

Suggested Citation

  • Ngonidzashe Chiranga & Teboho J. Mosikari & Mulatu F. Zerihun, 2024. "An empirical analysis of challenges of implementing AfCFTA on South Africa’s trade in the SADC region: evidence using the PPML Estimation Technique," International Journal of Business Ecosystem & Strategy (2687-2293), Bussecon International Academy, vol. 6(3), pages 138-149, July.
    • Handle: RePEc:adi:ijbess:v:6:y:2024:i:3:p:138-149
    DOI: 10.36096/ijbes.v6i3.605
    as

    Download full text from publisher

    File URL: https://www.bussecon.com/ojs/index.php/ijbes/article/view/605/274
    Download Restriction: no
    File URL: https://doi.org/10.36096/ijbes.v6i3.605
    Download Restriction: no
    File URL: https://libkey.io/10.36096/ijbes.v6i3.605?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Raihan, Selim, 2012. "SAFTA and the South Asian Countries: Quantitative Assessments of Potential Implications," MPRA Paper 37884, University Library of Munich, Germany.
    2. Marinov, Eduard, 2014. "Economic Integration Theories and the Developing Countries," MPRA Paper 63310, University Library of Munich, Germany.
    3. Mnasri, Ayman & Nechi, Salem, 2021. "New nonlinear estimators of the gravity equation," Economic Modelling, Elsevier, vol. 95(C), pages 192-202.
    4. Inotai, Andras, 1991. "Regional integration among developing countries, revisited," Policy Research Working Paper Series 643, The World Bank.
    5. Yotov, Yoto V., 2012. "A simple solution to the distance puzzle in international trade," Economics Letters, Elsevier, vol. 117(3), pages 794-798.
    6. Andrew Bell & Malcolm Fairbrother & Kelvyn Jones, 2019. "Fixed and random effects models: making an informed choice," Quality & Quantity: International Journal of Methodology, Springer, vol. 53(2), pages 1051-1074, March.
    7. Felix Olu Bankole & Kweku-Muata Osei-Bryson & Irwin Brown, 2015. "The Impact of Information and Communications Technology Infrastructure and Complementary Factors on Intra-African Trade," Information Technology for Development, Taylor & Francis Journals, vol. 21(1), pages 12-28, January.
    8. Andreas Lendle & Marcelo Olarreaga & Simon Schropp & Pierre‐Louis Vézina, 2016. "There Goes Gravity: eBay and the Death of Distance," Economic Journal, Royal Economic Society, vol. 126(591), pages 406-441, March.
    9. Tsekeris, Theodore, 2017. "Domestic transport effects on regional export trade in Greece," Research in Transportation Economics, Elsevier, vol. 61(C), pages 2-14.
    10. Abdulkareem Alhassan & Cem Payaslioglu, 2020. "Institutions and bilateral trade in Africa: an application of Poisson’s estimation with high-dimensional fixed effects to structural gravity model," Applied Economics Letters, Taylor & Francis Journals, vol. 27(16), pages 1357-1361, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Erick Kitenge & Sajal Lahiri, 2022. "Is the Internet bringing down language‐based barriers to international trade?," Review of International Economics, Wiley Blackwell, vol. 30(2), pages 566-605, May.
    2. Anders Akerman & Edwin Leuven & Magne Mogstad, 2022. "Information Frictions, Internet, and the Relationship between Distance and Trade," American Economic Journal: Applied Economics, American Economic Association, vol. 14(1), pages 133-163, January.
    3. Ferracane,Martina Francesca & Van Der Marel,Erik Leendert, 2021. "Regulating Personal Data : Data Models and Digital Services Trade," Policy Research Working Paper Series 9596, The World Bank.
    4. Jonathan E. Ogbuabor & Onyinye I. Anthony-Orji & Oliver E. Ogbonna & Anthony Orji, 2019. "Regional integration and growth: New empirical evidence from WAEMU," Progress in Development Studies, , vol. 19(2), pages 123-143, April.
    5. Martina Francesca Ferracane & Erik van der Marel, 2021. "Regulating Personal Data," World Bank Publications - Reports 35308, The World Bank Group.
    6. Denly, Michael & Helms, Benjamin, 2025. "A Report on "Corruption and Co-optation in Autocracy: Evidence from Russia"," I4R Discussion Paper Series 260, The Institute for Replication (I4R).
    7. Jaime de Melo & Alessandro Nicita, 2018. "Non-Tariff Measures: Data and Quantitative Tools of Analysis," Post-Print hal-01731305, HAL.
    8. Maqsood Aslam & Etienne Farvaque & Franck Malan, 2021. "A disaster always rings twice: Early life experiences and central bankers' reactions to natural disasters," Kyklos, Wiley Blackwell, vol. 74(3), pages 301-320, August.
    9. Parul Khokher & David Buehler & Roger White, 2024. "Distance as a determinant of trade costs: a different type of distance puzzle?," Economics Bulletin, AccessEcon, vol. 44(4), pages 1560-1572.
    10. Jules Hugot and Camilo Umana-Dajud & Camilo Uma�a-Dajud, 2017. "Trade Costs and the Suez and Panama Canals," Vniversitas Económica, Universidad Javeriana - Bogotá, vol. 0(0), pages 1-33.
    11. Kazunobu Hayakawa & Hiroshi Mukunoki & Shujiro Urata, 2023. "Can e-commerce mitigate the negative impact of COVID-19 on international trade?," The Japanese Economic Review, Springer, vol. 74(2), pages 215-232, April.
    12. Ivana Rukavina, 2022. "Evaluation of macroeconomic outcomes and the seven-year membership of Croatia in the European Union," Public Sector Economics, Institute of Public Finance, vol. 46(1), pages 1-42.
    13. Linlin Zhang & An Pan & Shuangshuang Feng & Yaoyao Qin, 2022. "Digital economy, technological progress, and city export trade," PLOS ONE, Public Library of Science, vol. 17(6), pages 1-17, June.
    14. Benedikt Heid & Mario Larch & Yoto V. Yotov, 2021. "Estimating the effects of non‐discriminatory trade policies within structural gravity models," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(1), pages 376-409, February.
    15. Felbermayr, Gabriel & Yotov, Yoto V., 2021. "From theory to policy with gravitas: A solution to the mystery of the excess trade balances," European Economic Review, Elsevier, vol. 139(C).
    16. Marie Dreger & Hauke Langhoff & Cornelia Henschke, 2022. "Adoption of large-scale medical equipment: the impact of competition in the German inpatient sector," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 23(5), pages 791-805, July.
    17. Maggie X. Chen & Min Wu, 2021. "The Value of Reputation in Trade: Evidence from Alibaba," The Review of Economics and Statistics, MIT Press, vol. 103(5), pages 857-873, December.
    18. KonShik Kim, 2023. "The impact of job quality on organizational commitment and job satisfaction: The moderating role of socioeconomic status," Economic and Industrial Democracy, Department of Economic History, Uppsala University, Sweden, vol. 44(3), pages 773-797, August.
    19. Ohnsorge,Franziska Lieselotte & Quaglietti,Lucia, 2023. "Trade as an Engine of Growth : Sputtering but Fixable," Policy Research Working Paper Series 10356, The World Bank.
    20. Raguideau-Hannotin, Léonore, 2023. "The case of financial and banking integration of Central, Eastern and South Eastern European countries: A gravity model approach," International Economics, Elsevier, vol. 174(C), pages 91-111.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:adi:ijbess:v:6:y:2024:i:3:p:138-149. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Umit Hacioglu (email available below). General contact details of provider: https://edirc.repec.org/data/ibihutr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.