Armed Conflicts and Intra‐regional Trade Flows: The Cases of ECOWAS and COMESA

Abstract

AbstractIn this study, we investigated the impact of armed conflicts on intra‐regional trade flows. We made use of panel datasets from 15 ECOWAS member and 19 COMESA member countries for the period 1997 to 2015. Applying a robust functional estimation procedure based on IV GMM principles, the results are found to be regionally comparable, with the evidence indicating that armed conflicts constrain intra‐regional export and trade openness. The results indicate that the classical insurgency theory explains better the patterns of intra‐regional export flows and trade openness; whereas the economic interest theory explains better the patterns of intra‐regional import flows. The impact of armed conflict intensity on intra‐regional trade flows is found to be sensitive to border proximity, trade diversification, mineral rents and national income levels. While border proximity on its own enhances intra‐regional export and import flows, it also has the tendency of exacerbating the negative impact of armed conflicts. As armed conflicts intensify, for instance, member countries become more incentivized to implement secured border and trade policies as a way of guarding against counter flows of arms and illicit commodities. Our study confirms the need for regional economic communities to concentrate their integration efforts towards mitigating domestic and cross‐border armed conflicts.