The Determinants Of Sub-saharan Africas (ssa) Bilateral Trade With The North A Gravity Model Approach

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This paper attempts to assess the determinants of SSA 's bilateral trade with the North . In thisrnregard, an a ugment ed gravity model has been specifi ed to annual imports of SSA cOllnt riesrnfrom the industrial countri es. The model is tested for a sample of 35 countries. 27 SSA and 8rnindustrial countri es over the period 1995-2007. In the model, the bil ateral import is a linearrnfun c tion of economic s ize, popu lation of the country, per capita income and geograph icalrndiffe rence and hi stori cal dummies. Specifically, SSA bilateral import is pos iti ve ly determinedrnby the s ize of econo mies (GOP of the importing and exporting country), lin guist ic andrnhi stori ca l ties. Infras tru cture indexes which are augmented as a proxy for public infrastruc tu resrnhave a lso a positive influence. On th e other hand, transportation cost proxied by geogra ph icalrndi stance and country's access to sea are found to have a negati ve influence on SSA bila teralrnimport . Likewise, the coeffici ent of per capita GOP differential between these countries has arnnegati ve s ign indi cating that the Linder e ffect dominates the H-O hypothesis in the case ofrnnorth - SSA trade fl ows.rnThe impli ca tion of these res ul ts is that all kinds of barriers to trade must be li berali zed to arngreater ex ten t to e nh ance SSA's bi lateral trade. Since one of the main probl ems of SubrnSaharan African trade is transport infrastructure network, improvement in infrast ructure mayrnbe a pre- req ui site for successful trade fl ows. A further study is a lso advised to investi gaternmanufac tu ring and non-manufacturing trade flows separate ly since they have di ffe rent tre nd s.

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The Determinants Of Sub-saharan Africas (ssa) Bilateral Trade With The North A Gravity Model Approach

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