An empirical analysis of African trade blocs effects on the global economy: new evidence from the gravity model

Abstract

AbstractThis study employs the gravity model to estimate the extent of the contribution of six African trade blocs to the global economy using the gravity model spanning from 1980 to 2018. The gravity equation that models the export contributions of the six selected African RECs to the global export is estimated. The estimated gravity model reveals that the long run estimations show that the coefficient estimate for SACU and ECCAS are insignificant in the long run while SACU, EAC and ECCAS as RECs, have insignificant contribution to export in the short run. Our findings, after establishing cointegration, on the other hand show that COMESA has the highest contribution to the global exports, followed by EAC, ECOWAS and SADC with ECCAS and SACU the lowest contributors. The highest contribution of COMESA followed by EAC may be due to the growing economy of member countries like Kenya and Rwanda, while that of COMESA and SADC may be as a result of the large economy of Nigeria and South Africa respectively. This study concludes that African countries are emerging with great export potentials, therefore, governments and private sectors should create the necessary incentives and export policies for the realization of these potentials to maximise the global value chain.