African Growth And Opportunity Act Research Articles

Comparing the effectiveness of the African Growth and Opportunity Act (AGOA) and Forum on China-Africa Cooperation (FOCAC) in South Africa: An application of Keynes' Macroeconomic Theory

This study applies Keynesian macroeconomic theory in the ARDL model to compare the growth effects of the US's AGOA and China's FOCAC multilateral trading systems in South Africa from the first quarter of 2001 to the fourth quarter of 2022. The study uses South Africa's net exports with the corresponding partner as a proxy for each multilateral trading system. This quantification stems from the fact that South Africa's trade with the US and China has significantly improved since the establishment of AGOA and FOCAC in 2000. Our findings show that none of the multilateral trading systems contribute significantly to South Africa's economic growth. Rather, they appear to be used as strategic initiatives to gain access to mineral resources and facilitate the movement of mining machinery and other inputs into South Africa. To some extent, they are used as market-seeking initiatives, particularly FOCAC. It is worth noting, however, that the mineral resource preferences of these systems vary: while China prioritizes mineral products, the US prioritizes precious metals. This suggests that China and the US scramble for natural resources in South Africa, and possibly Africa in general, is complementary rather than competitive.

The African growth and opportunity act (AGOA) and export performance: a case study of the united republic of Tanzania in relation to its east African partner states

This study assesses the effectiveness of the African Growth Opportunity Act (AGOA) on the export performance of Sub-Saharan African countries (SSA) countries. Tanzania’s export performance in relation to that of the other three East Africa Community (EAC) partner states, namely, Kenya, Rwanda, and Uganda, is investigated. The study employs a traditional trade model based on the Ordinary Least Square (OLS) procedure, covering the pre-and post-AGOA period from 1990 to 2020, 11 years before the signing of AGOA and 20 years after it. The main differences between this study and previous studies assessing the impact of AGOA preference include a longer sample period, the techniques of treating the model in the empirical analysis, and the number of countries assessed that allows to observe what differentiates the AGOA’s impact on SSA countries. A panel model showing the overall impact of AGOA, and individual country regressions are estimated. The panel results show no impact of AGOA on the export performance of the EAC partner states, while to the individual country findings indicate that AGOA has a significant impact only on the total exports of Kenya, to the country of interest that is Tanzania is insignificant. The policy implications of the findings are discussed.

Regional Factors Influencing Bilateral Trade Between Kenya and South Africa

Trade in the modern world has evolved due to the liberalization and integration of the world into one unit. This has led to the practice of trade in multilateral, regional, and bilateral frameworks where states advance their diplomatic interests through negotiations, networking, regulations, and participation. Foreign trade is influenced by key regional factors like comparative advantage, level of investment, and domestic absorption rate. The study investigated the regional factors influencing bilateral trade between Kenya and South Africa, which are among the top economies in Africa and control a significant GDP within their regional trading blocs. The two nations enjoy trade under various global and regional arrangements like the African Growth and Opportunity Act (AGOA), the African Union (AU), and the African Continental Free Trade Area (AfCFTA). Trade between Kenya and South Africa has been uneven for the last three decades, with South Africa reaping more from exports compared to Kenya. The objective of the study was to examine the regional factors influencing bilateral trade between Kenya and South Africa. The significance of the study was to add to the knowledge pool and guide policy formulation between the two states. The study focused on the nexus between regional factors and economic diplomacy between the two states from 1994 to 2023. The standard theory and Keynesian theory were used to inform the conceptual foundation for the study. The study adopted purposive sampling and simple random sampling techniques to draw a sample size of 333 participants from the study area (Republic of Kenya and South Africa High Commission in Kenya). Primary data from interviews and questionnaires and secondary data from internet materials, journal articles, and books were adopted. Data was analyzed using the Statistical Package for Social Sciences (SPSS) software, and results were presented thematically and through verbatim quotations. The findings were presented via frequency distribution tables and percentages. The study established that comparative advantage, level of investment, and domestic absorption rate were the key regional factors affecting bilateral trade between Kenya and South Africa. The study found that South Africa has a higher competitive advantage in international trade over Kenya, characterized by a low influence of comparative advantage, a low level of investment, and a high domestic consumption rate. The study recommended that Kenya place emphasis on addressing the key regional factors by leveraging endowment factors, establishing laws to attract more FDI, and increasing technical training to improve production and ensure surpluses for export.

The politics of human rights trade sanctions: evidence from the African Growth and Opportunity Act

Scholars contend that embedding human rights conditionality in trade agreements can improve human rights. We argue that human rights interests may collide with trade, investment, and security interests. We examine these claims in the context of the African Growth and Opportunity Act (AGOA), a unilateral trade preference program with robust human rights conditions, created in 2000 by the United States for up to 49 potentially eligible sub-Saharan Africa (SSA) states. US decisions to terminate AGOA beneficiary status are determined strongly by US trade, investment, and security interests. The country’s human rights record, including state-sponsored killings and other violations of physical integrity rights, has a less consistent and weaker effect.

Dampak Kebijakan Luar Negeri Amerika Serikat terhadap African Growth and Opportunity Act (Agoa) Bagi Pembangunan di Afrika Selatan

As a superpower country that plays an essential role in supporting the development of third-world countries, the United States of America issued a policy made explicitly for countries in the Sub-Saharan African countries. This study attempts to discuss African Growth and Opportunity Act (AGOA) as a foreign policy initiated by the United States as the leading actor in providing economic assistance to support the development in Africa. This study uses the concept of foreign policy to achieve the state’s national interest. It uses the qualitative method to collect the data needed to fulfill the information regarding the author’s topic. This study finds that this policy immensely helped Africa become a productive region and compete internationally. Although its application has many challenges, AGOA generally grants both parties. The increasing development of the global world that has become more complex and the change of the leader of the U.S. has made this U.S. foreign policy within the AGOA run dynamically, which means that it can shift according to the circumstances.

Benefits of Nigeria’s Participation in the African Growth and Opportunity Act

Abstract With a view to understand the benefits of Nigeria’s participation in the African Growth and Opportunity Act (AGOA) this paper examines US–Nigeria’s trade relations between 2001 and 2022. The paper argues that the lofty provisions of AGOA are laudable, even though unworkable, and given the environments within which the provisions of the trade policy were drafted and enacted, the subscription was carried out, and the implementation is pursued AGOA helps to entrench Nigeria in its peripheral position of world economy. The skewed impacts of the application of the basic assumptions of David Ricardo’s comparative advantage postulation to the patterning of US–Nigeria’s trade under AGOA raises critical empirical questions. Consequently the paper concludes that rather than continuing to perform its historic economic rituals to global democratic capitalism Nigeria needs emancipation from the stranglehold of unremunerated primary exports or insolvency would scuttle it irretrievably into an ungovernable chaotic territorial entity.

African growth and opportunity act (AGOA) and exports of Sub-Saharan African countries to the United States of America: Does credit matter?

The Africa Growth and Opportunity Act was introduced by the United States of America to enable beneficiary countries to boost their export volumes and make way for growth and development. The study aims at estimating the effect of the Act on export from sub-Saharan African countries to the United States of America considering the role of credit. A panel data for 49 countries sourced from IMF DOTS, WDI, and CEPII for the period 1980 to 2020 was employed. Using the GMM, and the differences in differences estimation techniques, the findings showed that the AGOA trade preference has not achieved the purpose for which it was introduced. It is however found that export to the United States can be improved under the trade preference if credit is provided to the private sector. It is therefore recommended that credit accessibility should be made easy to make way for private sector investment in the production process to feed the export sector.

History of Sub-Saharan Africa’s Long Journey towards Economic Emancipation

Abstract The history of the African Growth and Opportunity Act (AGOA) i.e., the trade partnership between the US and sub-Saharan African states indicates that the initial Clinton Administration blueprint for this venture was to operate for eight years, from 2000 to 2008. However, in 2004 George Bush, the incoming US president, pushed the AGOA mandate to 2015. Before the AGOA order could expire, its mandate was again extended to 2025 by then US president Barack Obama. This study argues that the lofty ambitions inscribed in the design of AGOA seem not to have lived up to their billing. The study finds that the theoretical win-win proposition that was envisioned does not appear to have yielded the desired economic results for sub-Saharan states mainly because the enterprise is likely a one-sided trade deal in favour of the US. Data for this study was gathered from qualitative and quantitative sources. The study concludes that given the pattern of the US engagements with sub-Saharan Africa, which seems only focused on advancing US national interests, the sub-Saharan region needs to devise alternative trade partnerships if its economy is to grow. The study recommends that sub-Saharan Africa focuses on intra-Africa trade. Alternatively, it should strengthen development cooperation with emerging markets such as the BRICS (Brazil, Russia, India, China, and South Africa).

Interrogating the growth of Africa through the opportunity act and the Nigerian textile industry

The study examined the impact of AGOA on the textile industry in Nigeria between 2000 and 2015. The African Growth and Opportunity Act (AGOA) was signed into law on May 18, 2000 as Title 1 of The Trade and Development Act of 2000. The Act offers tangible incentives for African countries to continue their efforts to open their economies and build free markets. This paper attempts to answer the question: Did the preferential access to the U.S. market under AGOA increase the volume of textile export from Nigeria to U.S. between 2000 and 2015? Secondary data were used and data collected were analysed using tables and content analysis. The study adopted the Complex Interdependence theory as its preferred framework of analysis and argued that the letter and spirit of AGOA were both in consonance with the neoclassical model of growth for SSA designed by the U.S. We remarked that this liberalised trade introduced by United States in Sub-Saharan Africa through AGOA was equally deepened to strengthen U.S. involvement capacity to this under developed markets in Sub-Saharan Africa. The study found out that the preferential access to U.S. market under African Growth and Opportunity Act did not increase the volume of textile export from Nigeria to the U.S. between 2000 and 2015. Finally, the study made profound recommendations aimed at maximizing the benefits inherent in the Nigeria-United States trade relationship.

The “Africa Recolonization Act”? The Politics of Pan-Africanism and Globalization in the 1990s

This article examines the conflict between two visions of Pan-Africanism and global economic integration in the late 1990s. On one side, many African political and economic elites allied with some Black leaders and groups in the United States to support legislation called the African Growth and Opportunity Act (AGOA). This article argues that AGOA represented a form of neoliberal Pan-African politics, which posited that African freedom and prosperity required embracing global capitalism. Contesting this vision were progressive nonprofits, unions, and legislators in Africa and the United States. In the United States, these groups offered an alternative trade deal—the Human Rights, Opportunity, Partnership, and Empowerment Act. This bill, in turn, articulated a social democratic Pan-Africanist worldview and a challenge to global neoliberalism.

Contributions of African Growth and Opportunity Act to International Trade of Sub-Saharan Africa

The relative failure of Sub-Saharan African (SSA) countries to access the benefits of global trade despite several attempts at a variety of international economic models is common knowledge. This paper subjects the trade relations between the United States and SSA within the African Growth and Opportunity Act (AGOA) to a historical, interpretive, and analytical examination to ascertain the contributions of the preferential trade agreement to international trade of Sub-Saharan African countries. Paper finds that the two-way increases in the trade of the U.S. and SSA under AGOA safeguard the continuous access of the U.S. to cheap produce of African countries. The paper concludes that SSA countries would continue to depend on preferential trade agreements for their international trade.

Are trade preferences a Panacea? The export impact of the African growth and Opportunity Act

Does “infant industry” preferential access durably boost exports? Using country-product-year data for 1992–2017 and triple-differences regressions, we show that the African Growth and Opportunity Act (AGOA) enhanced apparel exports of African countries on average. But the impact leveled off after the Multi-Fiber Arrangement unleashed competition from Asian countries. Furthermore, the positive average impact masks regional heterogeneity: East Africa’s late-bloomers offset Southern Africa’s boom-bust pattern. Overall, we find little evidence that preferences durably boosted exports.

African Growth and Opportunity Act (Agoa): Impact on Small Businesses and Export Revenue in Nigeria

The African Growth and Opportunity Act (AGOA), bipartisan trade legislation and a cornerstone of US commercial policy towards Sub-Saharan Africa (SSA), was enacted on 18 May 2000. The non-reciprocal initiative granted unprecedented duty-free access to more than 1800 eligible exports of SSA. The ultimate objective of this initiative is to create small businesses, boost exports and enhance economic growth in SSA. This study, therefore, analyzed available trade data from 2000 to 2019 to ascertain whether or not Nigeria’s non-oil exports to the US have increased as a result of AGOA. We undertook a descriptive and non-technical analysis of the impact of AGOA, which revealed that Nigeria’s non-oil exports to the US had not shown any discernable or notable increase since 2000. Excluding oil exports, the US has experienced a trade surplus with Nigeria since the inception of AGOA. Hence, the expected positive impact of AGOA on small businesses remains elusive. Policy recommendations on how Nigeria may overcome the impediments to AGOA are discussed.

US Trade Preference and Export Performance of Sub-Saharan Africa (SSA): Evidence from the African Growth and Opportunity Act (AGOA)

AbstractThe African Growth and Opportunity Act (AGOA) was signed into law in May 2000 to encourage increased trade and investment between the United States and Sub-Saharan Africa (SSA). It provides eligible countries with duty free access to the US market for over 1800 products in addition to those available under the Generalized System of Preferences (GSP). The benefits extend through 2025. This study explores the link between US trade preferences under AGOA and beneficiary country exports. Using a large US import database, the study examines the extent to which AGOA influences export performance. It also examines the moderating roles of rule of law and foreign direct investment. The results largely indicate that AGOA has a positive and significant effect on beneficiary country exports. It also shows that rule of law moderates the relationship between AGOA and export performance. We believe that AGOA will target foreign direct investment (FDI) to SSA from other advanced regions such as the EU to take advantage of the US market. However, the role of FDI appears to be weak in moderating the relationship between trade preferences (tariff concessions) and exports from beneficiary countries to the US market.

African Growth and Opportunity Act (AGOA): Program Usage, Trends, and Sectorial Highlights (Testimony in Hearing)

African Growth and Opportunity Act (AGOA): Program Usage, Trends, and Sectorial Highlights (Testimony in Hearing)

English

The potential of the agro-processing sub-sector in South Africa is under siege. This paper makes a critical view of this sector by identifying its opportunities and constraints so as to guide its improvement as well as the required interventions to unlock its potential. Given the contemporary issues of exponential population growth and soaring rates of unemployment and poverty, this paper explores agro-processing opportunities that could help to ameliorate the situation. This challenge is complex and widespread, thus a multi-pronged approach is required to address it. The approach used in this study is secondary research that investigates several issues in the agro-processing eco-system including the issue of imports, challenges with some of the government’s plans for the agro-processing sub-sector, consumer advocacy, and factors in the value chain that compromise the effectiveness of the ‘field to fork’ process. The findings reveal some dissonance between theory and practice such as the “million possible new job opportunities” in the sector identified by government versus the reality of only 30 000 jobs created over a ten-year period. To mitigate such risks and to support the government through some of the tricky trade deals such as the African Growth and Opportunity Act (AGOA), the role of active citizenry was conspicuous. The global production and consumption pattern have tipped the scales in favour of larger enterprises and this does not augur well for rural development and job creation. Therefore, the exploration of alternative production models such as ‘production sharing’ is paramount as it entails strategic alliances and subversion of the buyer-supplier relationship. Key words: Agro-processing eco-system, food production and distribution, consumer advocacy, job opportunities.

The African Growth and Opportunity Act and growth in sub‐Saharan Africa: A local projection approach

AbstractThe African Growth and Opportunity Act (AGOA) is intended to increase exports and economic growth in sub‐Saharan Africa by providing trade preferences to eligible countries. While previous research has generally found a positive relationship between AGOA and exports, no previous research has investigated the relationship between AGOA and economic growth. We explore the dynamic relationship between AGOA and economic growth in sub‐Saharan Africa by applying the local projection method (American Economic Review, 95, 2005 and 161) to estimate impulse responses. We find that a country's becoming eligible for AGOA preferences is associated with higher growth rates in the future, but that this effect may not be immediate, highlighting the importance of exploring the dynamic relationship between AGOA and growth.

A comparative analysis of EU and US trade policies towards least developed countries and the African Growth and Opportunity Act beneficiaries

AbstractMotivationThe European Union (EU) and the US have specific trade preference programmes in place directed towards developing countries in general and, primarily in the case of the EU, towards least developed countries (LDCs) in particular. This article examines the relative merits of these programmes.PurposeThe article compares the trade policies of the EU and the US with respect to LDCs and the countries eligible for the US African Growth and Opportunity Act (AGOA) and examines the relative success of the two donors’ trade policies vis‐à‐vis these two groups of beneficiaries in terms of increasing imports from them.Approach and methodsEconometric evidence from a gravity model is used to compare the effects of EU and US preferential trade policy on imports from the beneficiary countries. First, regressions are carried out using total EU and US imports as dependent variables and, second, EU and US duty‐free imports are used.FindingsThe descriptive part of the article shows that (a) a larger share of EU imports benefits from duty‐free MFN tariffs; (b) the EU offers preferences on all imports from the LDCs (except arms and ammunition), while the US extends preferences to three quarters of all imports; (c) EU preferences are better utilized; and (d) the EU imports more goods duty free. The econometric analysis shows that EU trade policy towards the LDCs and the AGOA beneficiaries has generated approximately twice as much in imports as US policy, when imports of mineral fuels are excluded from the analysis.Policy implicationsEU trade policy is found to outperform US trade policy in terms of generating imports from the LDCs and the AGOA beneficiaries. Hence, if any trade policy ought to be copied by other countries, as suggested by some observers, it should be EU trade policy rather than US trade policy.

Does the African Growth and Opportunity Act (AGOA) impact EU-15 imports from Africa?

PurposeAt the heart of the African Growth and Opportunity Act (AGOA) are substantial trade preferences, which coupled with the Generalised System of Preferences (GSP) grant a wide range of goods produced in qualified African countries duty-free access to the USA. To be AGOA-eligible, countries are assessed annually on their progress in undertaking appropriate economic, institutional and human rights reforms. This paper seeks to cover new grounds by exploring whether exports of apparel to US crowds out EU-15's imports from Africa.Design/methodology/approachThis paper employs the gravity model to gauge trade displacement effects from the EU to the US due to AGOA, and whether the more relaxed special waiver embodied in AGOA's apparel provision causes non-knitted exports to EU-15 to be crowded out. The basic gravity model, which posits that trade between two countries is positively influenced by the economic size and negatively affected by the distance between them, is augmented with other trade inhibiting and trade facilitating variables.FindingsThe gravity model provides no evidence of trade displacement but, instead, provides support for the hypothesis of complementarity of African exports to the two key markets. A strong positive impact of the bilateral trade between the US and Africa on the EU–African trade is evident mainly before the phasing out of the Agreement on Textiles and Clothing (ATC). This paper finds that Special Rule beneficiaries' exports to the two markets still complement each other, but for every percentage increase in exports to the USA, there is a less than proportionate increase in exports to EU-15 indicating a higher utilisation of the special waiver. This paper also provides evidence for complementary apparel exports to both LDCs (least developing countries) and non-LDCs, with stronger effects on non-LDCs and the non-knitted sector.Research limitations/implicationsFuture work could consider the longer lifespan of AGOA following its latest renewal in 2015. This would allow one to also capture the ongoing changes in EU trade arrangements in particular implementation of Economic Partnership Agreements (EPAs). This new agreement comes with more flexible rules of origin requiring single transformation step instead of the double step. As most African nations are still in the process of adopting EPAs, new research can shed more light on complementary or displacement effects once these agreements are adopted.Originality/valueSince the main intent of AGOA is to enhance Africa's integration into the global economy by encouraging trade and investment, generate employment and increase productivity and per capita income growth, its impact on Special Rule beneficiaries' exports to the US has been extensively examined. However, the indirect effects of this trade agreement on African exports to other key markets providing similar preferences such as the EU has not been fully explored. This study also covers new grounds by examining whether there has been any apparel trade displacement from the EU to the US, as a result of the Act, over 2001–2016 period right from AGOA's inception.

Does trade reduce infant mortality? Evidence from sub-Saharan Africa

Abstract Trade can affect the development process of a country via various direct and indirect mechanisms. Empirically, it is difficult to identify causal effects, as trade is likely to be endogenous to other socio-economic factors that also affect development. To overcome this problem, this study uses a trade policy experiment called the African Growth and Opportunity Act (AGOA) which conferred many sub-Saharan African countries largely duty-free and quota-free access to US markets. Using retrospective birth histories from Demographic and Health Survey (DHS), I develop a large micro panel dataset that spans 30 sub-Saharan African countries and carry out a within-mother variation in survival of infant to find a causal impact of the policy. Identification in this analysis is based on each country’s exposure to the trade policy at different points in time. I find that the policy reduces infant mortality by about 9% of the sample mean, even after controlling for country-time linear trends as well as mother’s time invariant characteristics. Event study reveals no effects prior to AGOA implementation, corroborating that the decrease in infant mortality is due to AGOA. I also find strong heterogeneous effects at the country and household level. The effects range from there being no significant effect to a strong increase or a strong decrease in infant deaths at the country level. The effect of AGOA on infant survival is stronger for countries that export large amounts of agricultural goods and mineral ores as compared to oil exporting countries. At the micro level, I see stronger effects for the uneducated, rural, and poor women via those women employed in agriculture or using manual labor, indicating increasing incomes as a possible mechanism. This study provides the first estimates of the effects of AGOA on infant mortality and adds to the literature on the quantitative impact of trade on health.