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The comparative effects of independence on trade

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  • Lavallée, Emmanuelle
  • Lochard, Julie

Abstract

Empirical evidence suggests that belonging to an empire favours trade by lowering transaction costs and establishing preferential trade agreements. Does the end of an empire invert this effect, and if so, through which channels? This paper uses an original dataset to explore the impact of independence on former colonies’ bilateral trade over the 1948–2007 period. We show large differences across empires. Whereas independence reduces the trade (imports and exports) between former French colonies and their coloniser, as well as with other colonies of the same empire, we do not find any comparable effect for former British colonies. We attribute this finding to the particularly protectionist trade policy implemented by France during the colonial era, and we are able to rule out alternative explanations related to transaction costs. We also find that after independence, all former colonies trade more with third countries, and we relate this result to the geographical diversification of trade.

Suggested Citation

  • Lavallée, Emmanuelle & Lochard, Julie, 2015. "The comparative effects of independence on trade," Journal of Comparative Economics, Elsevier, vol. 43(3), pages 613-632.
    • Handle: RePEc:eee:jcecon:v:43:y:2015:i:3:p:613-632
    DOI: 10.1016/j.jce.2014.11.001
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    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F54 - International Economics - - International Relations, National Security, and International Political Economy - - - Colonialism; Imperialism; Postcolonialism

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