Trade costs and the integration of British West Africa in the global economy, c. 1840–1940

Abstract

Despite the essential role of trade for African economies, in the extensive literature on the historical evolution of international trade costs, Africa is still missing. In this article, we contribute to filling this gap by (1) providing the first estimates of British West Africa's trade costs with Britain c. 1840–1940 by computing relative price gaps in a representative sample of African export and European import prices, and (2) analysing the main determinants of trade costs trends, by regressing price gaps on measures of transport costs, market efficiency, and trade barriers. The results uncover a diverging pattern in African and global trade costs trends, which was not noticed in the previous literature. British West Africa experienced a reduction in its trade costs with Britain c. 1840–70, similar to the one we observe in other world areas, thanks to improvements in shipping technology and market efficiency. From the late 1870s, however, as colonial monopsonistic trading companies consolidated their control of African export markets, trade costs continued to decline in the rest of the world, but not in British West Africa. Consequently, from the late nineteenth century, trade for West Africa became relatively more expensive than for other world regions.