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Over the period 1990-2009, Africa has experienced a distinct and favourable reversal in its growth fortunes in stark contrast to its performance in the preceding decades, leading to a variety of hypotheses seeking to explain the phenomenon. This paper presents both crosscountry and panel-data evidence on the causal factors driving the recent turnaround in Africa's growth and takes the unique approach of disaggregating the separate growth impacts of Africa's bilateral trade with: China, Europe and America. The empirical analysis presented in this paper suggests that the primary and most robust causal factors driving Africa's recent growth turnaround are private sector-and foreign direct investment. Although empirical evidence of the role of bilateral trade openness in Africa's recent growth emerges within a fixed effect estimation setting, these results are not as robust when endogeneity and other issues are fully accounted for. Among the three major bilateral partners, Africa's bilateral trade with China has been a relatively important factor spurring growth on the continent and especially so in resource-rich, oil producing and non-landlocked countries. The econometric results are not as supportive of growth-inducing effects of foreign aid. These findings emerge after applying a variety of panel data specifications to the data, including the recent fixed Effects Filtered (FEF) estimator introduced by Pesaran and Zhou (2014) and the dynamic panel Generalized Method of Moments (GMM) estimator, which allows for endogeneity between trade and growth.

PurposeAt the heart of the African Growth and Opportunity Act (AGOA) are substantial trade preferences, which coupled with the Generalised System of Preferences (GSP) grant a wide range of goods produced in qualified African countries duty-free access to the USA. To be AGOA-eligible, countries are assessed annually on their progress in undertaking appropriate economic, institutional and human rights reforms. This paper seeks to cover new grounds by exploring whether exports of apparel to US crowds out EU-15's imports from Africa.Design/methodology/approachThis paper employs the gravity model to gauge trade displacement effects from the EU to the US due to AGOA, and whether the more relaxed special waiver embodied in AGOA's apparel provision causes non-knitted exports to EU-15 to be crowded out. The basic gravity model, which posits that trade between two countries is positively influenced by the economic size and negatively affected by the distance between them, is augmented with other trade inhibiting and trade facilitating variables.FindingsThe gravity model provides no evidence of trade displacement but, instead, provides support for the hypothesis of complementarity of African exports to the two key markets. A strong positive impact of the bilateral trade between the US and Africa on the EU–African trade is evident mainly before the phasing out of the Agreement on Textiles and Clothing (ATC). This paper finds that Special Rule beneficiaries' exports to the two markets still complement each other, but for every percentage increase in exports to the USA, there is a less than proportionate increase in exports to EU-15 indicating a higher utilisation of the special waiver. This paper also provides evidence for complementary apparel exports to both LDCs (least developing countries) and non-LDCs, with stronger effects on non-LDCs and the non-knitted sector.Research limitations/implicationsFuture work could consider the longer lifespan of AGOA following its latest renewal in 2015. This would allow one to also capture the ongoing changes in EU trade arrangements in particular implementation of Economic Partnership Agreements (EPAs). This new agreement comes with more flexible rules of origin requiring single transformation step instead of the double step. As most African nations are still in the process of adopting EPAs, new research can shed more light on complementary or displacement effects once these agreements are adopted.Originality/valueSince the main intent of AGOA is to enhance Africa's integration into the global economy by encouraging trade and investment, generate employment and increase productivity and per capita income growth, its impact on Special Rule beneficiaries' exports to the US has been extensively examined. However, the indirect effects of this trade agreement on African exports to other key markets providing similar preferences such as the EU has not been fully explored. This study also covers new grounds by examining whether there has been any apparel trade displacement from the EU to the US, as a result of the Act, over 2001–2016 period right from AGOA's inception.