Border Effects of Overlapping Regional Trade Blocs in Africa

Abstract

This paper tests the hypothesis that overlapping and competing regional trade blocs undermine trade in Africa. Using the proposed merger of three trade blocs in the Eastern and Southern Africa region into a Free Trade Area and estimating gravity equations of bilateral trade flows, the hypothesis finds no support in the data. Instead, regional trade is a product of distance, adjacency, size dispersion and dual membership. I conclude that perceived negative effect of interregional borders may be exaggerated and hence a weak argument for merging the trade blocs.