Is Agricultural Production Spillover the Rationale Behind NEPAD CAADP Framework? Spatial Econometric Approach

Since 2003, the NEPAD Comprehensive Africa Agriculture Development Programme (CAADP) has been endorsed by African Heads of State and Governments as a vision for the restoration of agricultural growth, food security, and rural development in Africa. The program aims at stimulating agriculture-led development that eliminates hunger and reduces poverty and food insecurity. As pointed out by Etro (2001), the creation of a union or adoption of a common agenda should move the equilibrium toward the first best solution whenever policies generate spillovers. This arises because the ability of a common agenda to reduce the scope of free-riding behavior among member countries. In addition, increasing world market integration leads to more externalities which call for policy coordination and supernational jurisdictions (Spolaore and Wacziarg, 2000). Using Spatial Durbin Model for panel data, the paper intends to investigate the presence of externalities in agricultural production within sub-Saharan African countries to validate the rationale for initiating CAADP. The model is estimated for the 1961-2006 period as well as sub-periods between 1961 and 2006. Over time, the results confirm the existence of positive and significant agricultural spillover. The findings suggest that the speed of convergence is faster when accounting for agricultural production spillover across countries.