Services' trade in Africa: Structure and growth

Abstract

AbstractThis paper shows that trade in services is still at its infancy in Africa. Its growth started later than for other developed and developing economies and, so far, it involves mostly low‐skilled services. Disentangling the different sources of trade growth, we find that demand and supply determinants have been relatively stable during the period 2002–2016, while service diversification and trade policy are the main propellants. In particular, trade in goods liberalisation increased services trade as well due to the complementarities between the two. In terms of geographical and industrial involvement, services produced in Africa are able to reach farther destinations than goods, but they are concentrated on industries close to final demand, thus missing high‐skilled services that are more upstream, but represent higher value‐added inputs. Therefore, there is still plenty of scope to consider trade in services as a potential source of growth and development for African countries.