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Estimation of Missing Intra-African Trade

  • Villoria, Nelson

Missing trade is defined as the exports and imports that may have taken place between two potential trading partners, but which are unknown to the researcher because neither partner reported them to the United Nation’s COMTRADE, the official global repository of trade statistics. In a comprehensive sample of African countries, over 40% of the potential trade flows fit this definition. For a continent whose trade integration remains an important avenue for development, this lack of information hinders the analysis of policy mechanisms -- such as the Economic Partnership Agreements with the EU -- that influence intra-regional trade patterns. This paper estimates the likely magnitude of the missing trade by modeling the manufacturing trade data in the GTAP Data Base using a gravity approach. The gravity approach employed here relates bilateral trade to country size, distance, and other trade costs while explicitly considering that high fixed costs can totally inhibit trade. This last feature provides an adequate framework to explain the numerous zero-valued flows that characterize intra-African trade. The predicted missing exports are valued at approximately 300 million USD. The incidence of missing trade is highest in the lowest income countries of Central and West Africa.

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File URL: https://www.gtap.agecon.purdue.edu/resources/res_display.asp?RecordID=2915
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Paper provided by Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University in its series GTAP Research Memoranda with number 2915.

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Date of creation: 2008
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Handle: RePEc:gta:resmem:2915
Note: GTAP Research Memorandum No. 12
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  1. Souleymane Coulibaly & Lionel Fontagné, 2006. "South--South Trade: Geography Matters," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 15(2), pages 313-341, June.
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  8. Coe, David T & Hoffmaister, Alexander W, 1999. "North-South Trade: Is Africa Unusual?," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 8(2), pages 228-56, July.
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  10. Andrew K. Rose, 2002. "Do We Really KNow that the WTO Increases Trade?," Working Papers 182002, Hong Kong Institute for Monetary Research.
  11. Longo, Robert & Sekkat, Khalid, 2004. "Economic Obstacles to Expanding Intra-African Trade," World Development, Elsevier, vol. 32(8), pages 1309-1321, August.
  12. Kennedy, Peter, 1983. "Logarithmic Dependent Variables and Prediction Bias," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 45(4), pages 389-92, November.
  13. Feenstra, Robert C, 2002. "Border Effects and the Gravity Equation: Consistent Methods for Estimation," Scottish Journal of Political Economy, Scottish Economic Society, vol. 49(5), pages 491-506, December.
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  16. McCallum, John, 1995. "National Borders Matter: Canada-U.S. Regional Trade Patterns," American Economic Review, American Economic Association, vol. 85(3), pages 615-23, June.
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