Heterogeneous effects of free trade areas (FTAs) on trade in Africa

Over the past few decades, numerous Free Trade Areas (FTAs) have been formed across Africa. However, the impact of these FTAs on trade dynamics has not been thoroughly examined. In this study, we employ the structural gravity model to investigate the trade implications of these FTAs. Our findings reveal that all FTAs have significantly boosted trade, with trade expansion varying from a fivefold increase in the Eastern African Community (EAC), the Economic Community of Central African States (ECCAS), and the Southern Africa Development Community (SADC), to a twofold surge in the case of the Common Market for Eastern and Southern Africa (COMESA). We further examine the heterogenous effects of FTAs, particularly focusing on whether countries share borders or not, and discover compelling evidence that FTAs foster greater trade expansion among border-sharing countries.