Abstract
This study evaluates the trade creation and diversion effects of regional trade agreements (RTAs) in sub-Saharan Africa, focusing on both aggregate and sectoral levels, while accounting for unobserved heterogeneities. Using the Poisson pseudo-maximum likelihood estimation method, we analysed a 22-year panel dataset (ranging from 2000 to 2021) comprising trade relations between 43 exporting and 127 destination countries. Our findings indicate that RTAs in this region vary in their effectiveness; all agreements, except for the Economic Community of Central African States in total trade and the Community of Sahel–Saharan States concerning primary and manufactured goods, positively boost intra-RTA trade. Furthermore, except for the East African Community, increased intra-regional trade correlates with increased exports to non-member countries. Notably, the net impact of RTAs differs significantly between primary and manufactured commodities, with more favourable outcomes for manufactured goods. These insights suggest that governments in sub-Saharan Africa must strengthen RTAs because regional economic integration can be used as a tool to promote intra-regional manufactured exports leading to industrialisation.
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