Trade Policy Space, Aid for Trade and, Intra-African and External African Manufactured Exports

Abstract

Boosting intra-African manufactured exports is a critical objective of African leaders. The present analysis examines whether trade policy space and Aid for Trade (AfT) flows can contribute to achieving this objective. The analysis covers an unbalanced sample of 36 African countries over the period from 2004 to 2020, and uses estimators that allow obtaining the short-term (i.e., within-country effect) and long-term (i.e., between-country effect) effects of each regressor. The estimators are the combination of the feasible generalized least squares estimator on the one hand, and the Seemingly Unrelated Regression on the other hand, in the context of a hybrid model. The findings indicate that both trade policy space and AfT flows can help promote - including in a complementary way - African manufactured exports, especially intra-African manufactured exports. In this regard, trade policy space and AfT flows are instrumental in meeting African leaders’ objectives of promoting intra-African trade. The implications of the findings are discussed.