Trade Facilitation and Export Diversification in Sub-Saharan Africa: Role of hard and soft infrastructure

Abstract

Abstract This study analyzes the effect of trade facilitation on export diversification in Sub-Saharan Africa (SSA). We constructed four aggregate indicators with principal component analysis and estimated panel data on 29 SSA countries over the period 2004–2017. The empirical results with the generalized method of moments show that trade facilitation indicators related to hard infrastructures such as physical infrastructure and information and communication technology contribute positively and significantly to export diversification in sub-Saharan Africa. It appears also that the border and transport efficiency indicator of trade facilitation related to soft infrastructure has a positive and significant effect on export diversification in SSA. These results are robust when using the number of products exported as an alternative measure of export diversification. Moreover, we show that the complementarity between hard and soft infrastructure increase export diversification. Based on these results, Sub-Saharan African countries should focus on developing and strengthening hard and soft infrastructure to boost export diversification.