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South-South Trade: Geography Matters

  • Souleymane COULIBALY
  • Lionel FONTAGNÉ

Intra-subsaharan African trade appears to be very low, an outcome that is often attributed to the size of the exporting and the importing economies. If that were the explanation, there would be no untapped trade potential. We argue instead that the main determinants of this "missing trade" are geographical and infrastructure-related impediments. Being landlocked and poor translates into high trade costs. In this paper, we try to measure the impact of geographical impediments on South-South trade. We focus on the intra and extra-regional trade of the countries belonging to the West African Economic and Monetary Union. We use an Armington-based model in order to evaluate the impact of geographical and infrastructure-related impediments on bilateral trade flows within this region. We find two main results: paving all inter-state roads would increase trade by a factor of 3, and crossing a transit country reduces intra-bilateral trade flows by 6%, ceteris paribus.

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Paper provided by Université de Lausanne, Faculté des HEC, DEEP in its series Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) with number 04.07.

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Length: 34 pages
Date of creation: May 2004
Date of revision:
Publication status: Published in Journal of African Economies, vol. 15 (2), June 2006, pp.313-341
Handle: RePEc:lau:crdeep:04.07
Contact details of provider: Postal: Université de Lausanne, Faculté des HEC, DEEP, Internef, CH-1015 Lausanne
Phone: ++41 21 692.33.20
Web page: http://www.hec.unil.ch/deep/publications/cahiers/series
Email:


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  1. Greenaway, David & Milner, Chris R, 1990. "South-South Trade: Theory, Evidence, Policy," World Bank Research Observer, World Bank Group, vol. 5(1), pages 47-68, January.
  2. Agnès Bénassy-Quéré & Maylis Coupet, 2003. "On the Adequacy of Monetary Arrangements in Sub-Saharian Africa," Working Papers 2003-11, CEPII research center.
  3. Jeffrey D. Sachs, 2001. "Tropical Underdevelopment," NBER Working Papers 8119, National Bureau of Economic Research, Inc.
  4. Henderson, J. Vernon & Shalizi, Zmarak & Venables, Anthony J., 2000. "Geography and development," Policy Research Working Paper Series 2456, The World Bank.
  5. Jean-Michel Pasteels & Michaël Pajot & Lionel Fontagné, 2002. "Potentiels de commerce entre économies hétérogènes : un petit mode d’emploi des modèles de gravité," Économie et Prévision, Programme National Persée, vol. 152(1), pages 115-139.
  6. Foroutan, Faezeh & Pritchett, Lant, 1993. "Intra-sub-Saharan African Trade: Is It Too Little?," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 2(1), pages 74-105, May.
  7. Douglas Staiger & James H. Stock, 1994. "Instrumental Variables Regression with Weak Instruments," NBER Technical Working Papers 0151, National Bureau of Economic Research, Inc.
  8. Lionel Fontagné & Michaël Freudenberg & Nicolas Peridy, 1997. "Trade Patterns Inside the Single Market," Working Papers 1997-07, CEPII research center.
  9. Redding, Stephen & Venables, Anthony J., 2004. "Economic geography and international inequality," Journal of International Economics, Elsevier, vol. 62(1), pages 53-82, January.
  10. Havrylyshyn, Oli, 1985. "The direction of developing country trade : Empirical evidence of differences between South-South and South-North trade," Journal of Development Economics, Elsevier, vol. 19(3), pages 255-281, December.
  11. Keith Head & Thierry Mayer, 2004. "Non-Europe : the magnitude and causes of market fragmentation in the EU," Cahiers de la Maison des Sciences Economiques bla99004a, Université Panthéon-Sorbonne (Paris 1).
  12. Limao, Nuno & Venables, Anthony J., 1999. "Infrastructure, geographical disadvantage, and transport costs," Policy Research Working Paper Series 2257, The World Bank.
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