The Effect of International Technology Cooperation on Bilateral Trade Flows: A Case of The Korea-Africa Food and Agriculture Cooperation Initiative (KAFACI)

Abstract

This paper used the gravity model of international trade to analyze the effects of international technology cooperation on bilateral trade flows between member and non-member countries of the Korea-Africa Food and Agriculture Cooperation Initiative (KAFACI). We used panel data of bilateral trade between 45 African countries from the United Nations commodity trade statistics database for the period between 2000 and 2018. To control for endogeneity, selection bias, and correlation within the panels, this study used the Heckman random-effect regression with sample selection technique. Although insignificant, the empirical results indicated a positive effect of international technology cooperation on bilateral trade flows between KAFACI member and non-member countries. Notwithstanding our findings, KAFACI might have significantly increased the bilateral trade flows between its members and main trading partners outside Africa, which were not explored in this paper. Besides, the level and rate of technology adoption by KAFACI member countries were also crucial for influencing the supply side of the economy to unlock trade, but they were not assessed in this study.