South‐South Trade and Geographical Diversification of Intra‐SSA Trade: Evidence from BRICs

Abstract

AbstractExport performance in sub‐Saharan Africa (SSA) is low, unlike the other developing regions, with an intra‐regional trade still weak and a trade pattern that remains very concentrated even if some progress seems to appear. Recent findings suggest that South‐South trade allows more improvement in export diversification of developing economies than North‐South trade. We examine the diversification of trading partners and more precisely, to what extent the nature of external trading partners matters for the geographical diversification of intra‐SSA trade. We apply this economic intuition to trade relationships between the BRICs (Brazil, Russia, India, China) and SSA countries in a context of shifting wealth and a trade reorientation for developing economies. We use a theory‐consistent and robust structural gravity model with three different dependent variables (value of bilateral export flows, binary variable for strictly positive export flows, number of export destinations) based on a worldwide database over the period 1948–2012. We attempt to compare the exports of each member of the BRICs to SSA in order to know whether there are different effects on the geographical diversification of intra‐SSA trade. Globally, Chinese exports to SSA have the strongest impact on the geographical diversification of intra‐SSA trade relative to the other BRICs.