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GTAP Resource #6216

by Majune, Socrates, Judy Kaaria and Evelyne Kihiu

This paper assesses the prospects of the African Continental Free Trade Area (AfCFTA), which commenced trading on 1st January 2021, in boosting intra-African trade in services. We analyze the Poisson pseudo maximum likelihood (PPML) estimator of the gravity model on bilateral services trade data for total services and nine categories of services; travel, transport, communication, computer and information services, construction, financial, insurance, Other Business Services, and personal, cultural and recreational services. Our data spans from 1995 to 2019 and it covers 51 African countries. Our first objective is to assess the effect of General Agreement on Trade in Services (GATS) on bilateral trade in services while the second objective establishes the role of trade facilitation on trade in services in Africa. We find that GATS significantly improves intra-African trade in total services by an elasticity of about 0.3. It also raises trade in travel, transport, communication, ICT, financial, insurance and Other Business Services. Nonetheless, GATS reduces trade in ICT services by an elasticity of about 1.2 while insurance services decline by about 0.7 times. We also find that most “hard” indicators of trade facilitation (mobile phone, fixed telephone and broadband subscriptions, and internet access) improve trade in services within Africa compared to “soft” factors (competition policy, investment policy, research and technology, and education and training, labour market regulation policy, cultural cooperation and regulatory quality) whose effect is mixed.

Resource Details (Export Citation) GTAP Keywords
Category: 2021 Conference Paper
Status: Not published
By/In: Presented during the 24th Annual Conference on Global Economic Analysis (Virtual Conference)
Date: 2021
Version: 1
Created: Majune, S. (4/8/2021)
Updated: Majune, S. (7/20/2021)
Visits: 541
- Multilateral trade negotiations
- Non-Tariff measures in services
- Trade in services
- Other data bases and data issues
- Africa (Central)
- Africa (East)
- Africa (North)
- Africa (Southern)
- Africa (West)

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