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GTAP Resources: Resource Display

GTAP Resource #6137

"Antecedents to the AfCFTA: Insights from export survival"
by Majune, Socrates, Kemal Türkcan and Eliud Moyi

The African Continental Free Trade Area (AfCFTA) is at the center-stage of most African governments as far as intra-Africa trade is concerned. This study contributes to this discussion by establishing insights from the current levels of export survival under the Common Market for Eastern and Southern Africa (COMESA) and the East African Community (EAC) agreements. Ideally, AfCFTA seeks to collapse many African trade agreements into one. Using monthly firm-product-destination customs transaction data from Kenya for over 144 months (January, 2006 to December, 2017), we empirically investigate how experience of trading under an agreement affects the export survival of firms. We find that the mean duration of exporting from Kenya is 25.1 months with a median of 18 months. In addition, exporting under a trade agreement improves duration of exporting by 2.3 months as opposed to trading under no agreement, especially deep agreements such as Common Market Protocols. Results from the probit model with random effects indicate that agreements significantly enhance export survival. However, our empirical analysis suggests that EAC increases export survival while COMESA dampens it. This means that trading to more African countries is not a guarantee for export survival because COMESA has more African countries than EAC. Therefore, we recommend that more research needs to be done with the result of COMESA. This will enable us to quantify the potential survival gains from the AfCFTA, which came into force very recently, on 30 May 2019.

JEL Classification: F14, F15, C35, C41
Key words: Export survival, Export duration, Discrete-time models, Economic Integration Agreements

Resource Details (Export Citation) GTAP Keywords
Category: 2020 Conference Paper
Status: Published
By/In: Presented during the 23rd Annual Conference on Global Economic Analysis (Virtual Conference)
Date: 2020
Created: Majune, S. (4/17/2020)
Updated: Majune, S. (6/18/2020)
Visits: 1,110
- Multilateral trade negotiations
- Other data bases and data issues
- Africa (East)

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