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What Matters for the Rise in Trade? Evidence from the African Continental Free Trade Area

Author

Listed:
  • Duong, K. T.
  • Huynh, L. D. T.
  • Lastauskas, P.
  • Vu, N. T.

Abstract

Using firm-level panel data on cross-border sales for 27 African economies (2002-2022), we study how the African Continental Free Trade Area (AfCFTA) reshaped firms’ international trade. Guided by a heterogeneous-firm model with two short-run channels, export-network history and capital-adjustment frictions, linked through goods-services input linkages, we document that the 2018 signing raised the ratio of international to total sales by 2.7 percentage points (pp) by 2022. The gains were uneven: firms with prior export experience outside Africa gained 2.8 pp, versus 1.2 pp for Africa-only exporters, and goods-producing firms and those facing lower adjustment frictions responded most. Network history and adjustment frictions thus shape who benefits from continental integration and how gains propagate across the goods-services linkage, so that an intra-continental agreement disproportionately rewards extra-continental traders.

Suggested Citation

  • Duong, K. T. & Huynh, L. D. T. & Lastauskas, P. & Vu, N. T., 2026. "What Matters for the Rise in Trade? Evidence from the African Continental Free Trade Area," Cambridge Working Papers in Economics 2680, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:2680
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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F18 - International Economics - - Trade - - - Trade and Environment
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development

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