TITLE:
Effects of Regional Trade Agreements on Strategic Agricultural Trade in Africa and Its Implications to Food Security: Evidence from Gravity Model Estimation
AUTHORS:
Fredu Nega Tegebu, Edris Hussein Seid
KEYWORDS:
Regional Trade Agreements, Food Security, Gravity Model, Africa
JOURNAL NAME:
Theoretical Economics Letters,
Vol.9 No.4,
March
18,
2019
ABSTRACT: The problems of African
agricultural development have been at the forefront of the debate on Africa’s
development since the Lagos Plan of Action in 1963. During the 2004 AU meeting
in Sirte, Libya and subsequently in the 2006 AU/NEPAD Summit on Food Security
in Africa, concrete steps have been taken to work towards Common African Market
on 12 selected strategic agricultural products. Eight regional trade agreements
which are to form the building blocks of the African Economic Community are
engaged in trade liberalization and regional integration process on the
selected strategic agricultural products with the ultimate goal being the
formation of Common Markets for Agricultural products. However, the recent
proliferation of regional trade agreements (RTAs) has intensified the debate on
their merits especially the merits of south-south trade agreements. This study
contributes to this debate by analysing trade creation and trade diversion
effects of African RTAs on trade in nine of the twelve strategic agricultural
products. An extended gravity model is estimated. We address econometrically
the endogeneity of RTAs using a panel approach. Results indicate that African
RTAs have mixed effect on trade creation and trade diversion. Net trade
creation is positive in three of the eight RTA and it is negative in two.
Although a lot remains to be done, RTAs in Africa are an attractive means to
speed up the move towards common market for agricultural products in the
continent. This will have positive implication for food security and
sustainable agricultural development in the continent.