An economic analysis of the effects of preferential trade agreements with sub-saharan Africa on trade flow, economic growth and poverty reduction: Evidence from the african growth and opportunity act

Details

Supervisors

Gaspart, Frédéric

Faculty

Faculté des bioingénieurs

Degree label

Master [120] en sciences agronomiques et industries du vivant, à finalité spécialisée: Agricultural, Food and Environmental Policy Analysis

Abstract

The number of preferential trade agreements has increased substantially in recent decades, mostly facilitated by the delays of the Doha round of negotiations, rising regional integrations, and global production networks. Sub-Saharan Africa over these periods has received a considerable number of non-reciprocal preferential trade agreements, such as the African Growth and Opportunity Act (AGOA), from the USA, with the main aim to improve its own share of international trade flow and to boost economic growth and development in the region. However, after more than two decades with these non-reciprocal preferential trade regimes, sub-Saharan Africa remains the world’s poorest region with the lowest share of international trade flow. The main objective of this study was to assess the effects of non-reciprocal preferential trade agreements on trade flow, economic growth, and poverty levels in sub-Saharan Africa with a focus on the Africa Growth and Opportunity Act. The analysis made use of data, on trade flow, GDP per capita, poverty rate, inflation, inequality, investment and remittance flow obtained from the World Integrated Trade Solution and World Bank Development Indicators for 22 sub-Sahara African countries over 22 years. We employed the gravity model of trade and a dynamic growth model. The empirical estimations based on the gravity model revealed that receiving AGOA status have a positive impact on trade flow with the USA, although the effect is not significant. Moreover, our analysis revealed that agricultural exports have a positive and significant impact on economic growth and a negative effect on poverty levels in sub-Saharan Africa. Our findings support the view that international trade can contribute to economic growth and poverty reduction in sub-Saharan Africa.