Can Intra-Regional Trade Act as a Global Shock Absorber in Africa?

18 Pages Posted: 4 Sep 2015

See all articles by Zuzana Brixiova

Zuzana Brixiova

International Monetary Fund (IMF) - European Department; African Development Bank

Qingwei Meng

African Development Bank

Mthuli Ncube

BARBICAN Asset Management; London School of Economics & Political Science (LSE) - Financial Markets Group

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Abstract

The global financial crisis and the subsequent uneven recovery have underscored the need for Africa's resilience to output and other shocks originated in the rest of the world. A comparison of two regional economic communities – the East African Community (EAC) and the Southern Africa Customs Union (SACU) – suggests that deeper intra-regional, and in particular intra-industry, trade ties have contributed to the EAC's resilience to external output shocks. More broadly, intra-regional and intra-African trade with fast-growing economies, together with geographically diversified trade links, can strengthen the capacity of African countries to absorb global output shocks. Besides helping shield countries from external shocks, intra-regional trade also supports economic diversification and participation in regional value chains.

Keywords: regional economic communities, output co-movement, intra-regional trade, Africa

JEL Classification: E32, F4, F15

Suggested Citation

Brixiova, Zuzana and Meng, Qingwei and Ncube, Mthuli, Can Intra-Regional Trade Act as a Global Shock Absorber in Africa?. IZA Discussion Paper No. 9205, Available at SSRN: https://ssrn.com/abstract=2655154 or http://dx.doi.org/10.2139/ssrn.2655154

Zuzana Brixiova (Contact Author)

International Monetary Fund (IMF) - European Department ( email )

700 19th Street NW
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African Development Bank ( email )

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Qingwei Meng

African Development Bank ( email )

15 Avenue du Ghana
P.O.Box 323-1002
Tunis-Belvedère
Tunisia

Mthuli Ncube

BARBICAN Asset Management ( email )

London School of Economics & Political Science (LSE) - Financial Markets Group

Houghton Street
London WC2A 2AE
United Kingdom

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