Publication: Trade Creation and Trade Diversion in African RECs: Drawing Lessons for AfCFTA
Date
2021-08
ISSN
Published
2021-08
Author(s)
Abstract
This study aims to draw key lessons for
the African Continental Free Trade Area using evidence from
within the region. Although drawing lessons from the rest of
the world is essential, given the unique features of
economies in the Africa region, the most relevant lessons
can be drawn from the experiences of regional economic
communities in the continent. The study draws on the eight
regional economic communities that have been recognized by
the African Union as pillars on which the continent will
rely to implement the African Continental Free Trade Area.
The study evaluates the trade creation and trade diversion
impacts of each of the eight RECs and examines their
performance with the goal of drawing lessons and identifying
challenges for the success of the African Continental Free
Trade Area. Despite significant heterogeneities, there is
more trade creation than trade diversion and a generally
positive impact on trade within the regional economic
communities. Two regional economic communities in
particular—the East African Community and the Southern
African Development Community—outperform all the other
regional economic communities in terms of boosting
intra–regional economic community trade. This is mainly
associated with the high level of investment in trade
facilitation, the level of synergy between national and
regional goals, the density of economic activity, and the
advancement in the quantity and quality of regional
infrastructure. There are also many challenges that policy
makers should address to realize the objectives of the
African Continental Free Trade Area and transform the
continent. Learning from the regional economic communities
is central. But, given the scope of the African Continental
Free Trade Area, there is also a need to examine the
transition from regional economic communities to the African
Continental Free Trade Area, which is expected to be a
sticky transition.
Citation
“Kassa, Woubet; Sawadogo, Pegdewende Nestor. 2021. Trade Creation and Trade Diversion in African RECs : Drawing Lessons for AfCFTA. Policy Research Working Paper;No. 9761. © World Bank, Washington, DC. http://openknowledge.worldbank.org/handle/10986/36226 License: CC BY 3.0 IGO.”
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