Trade Outcomes in Africa's Regional Economic Communities and Institutional Quality: Some Policy Prescriptions

Abstract

The global economic crisis of 2007/2008 that threatened the economic/financial fabrics of most countries has brought again the essence of strong institutional quality to the fore. This is particularly interesting as it impacted on trade outcomes in many countries including those in Africa. For instance, merchandize exports as a percentage of GDP for SSA reduced by 17.9% in 2007. Thus, this paper examines the effectiveness of RECs in Africa with respect to trade outcomes using some indicators, which was achieved using data from African Development Indicators, inter alia (1996-2008). Analyzing the data with descriptive and statistical techniques established, among others, that the respective indicators of trade outcomes, institutional quality were rather low and differed markedly across RECs in Africa. The study recommends that improvement of institutional quality in tandem with enhanced infrastructural facilities will play crucial roles in promoting trade outcomes in Africa’s RECs.

Keywords: exchange rate, export, regional economic communities, intra-regional trade

JEL Classification: E31, F13, G10