Examining coffee export performance in Eastern and Southern African countries: do bilateral trade relations matter?

Abstract

This study examines the impact and implications of the East African Community and the Common Market for Eastern and Southern Africa preferential trade agreements on coffee export performance of eight East and Southern African countries. The analysis employed a static and dynamic gravity modelling framework for the period 1998-2013. Following several robustness checks, the study found that regional trade agreements play a vital role in increasing coffee trading in East and Southern African countries. Factors including geographical distances, income, and population size in importing and exporting countries are also statistically significant determinants of coffee exports. The study also found that the exporting countries are currently under-performing with respect to their maximum potential to the global market indicating room for improvement.

Determinants of global coffee trade: Do RTAs matter? Gravity model analysis

“…The study conducted by Nsabimana and TafesseTirkaso (2019) examines the impact and implications of the East African Community and the Common Market for Eastern and Southern Africa preferential trade agreements on coffee export performance of eight East and Southern African countries by employing a static and dynamic gravity modeling framework for the period 1998-2013. They found that regional trade agreements play a vital role in increasing coffee trading in East and Southern African countries.…”

“…Ekanayake et al (2010) analyzed the trade creation and trade diversion effects of the regional trade agreements (RTAs) in Asia and their effects on intra-regional trade flows using annual trade data for the period 1980-2009 and find that the coefficients of real GDP, population, and distance had significantly affected export trade flow in Asian countries. More to product-level analysis, the work by Nsabimana and TafesseTirkaso (2019) examines the impact and implications of the East African Community and the Common Market for Eastern and Southern Africa preferential trade agreements on coffee export performance of eight East and Southern African countries by employing a static and dynamic gravity modeling framework for the period 1998-2013 and they found that factors including geographical distances, income, and population size in importing and exporting countries are also statistically significant determinants of coffee exports. Further, they also found that the exporting countries are currently under-performing with respect to their maximum potential to the global market indicating groom for improvement.…”

Do Free Trade Agreements Affect Tariffs of Nonmember Countries? A Theoretical and Empirical Investigation

“…To the best of our knowledge, this insight regarding the effect of FTAs on tariffs of nonmember countries has been generally overlooked in the literature. 2 In this paper, we first formally develop this insight in a simple economic framework based on Missios, Saggi, and Yildiz (2016) that uses an adapted version of Horn, Maggi, and Staiger (2010) and then provide empirical evidence in its support. The theoretical framework is a classical partial equilibrium set-up comprising an arbitrary number ( n ) of countries who produce a single numeraire good v 0 and n non-numeraire goods, where the marginal cost of production of each non-numeraire good increases with output.…”

“…Crivelli (2016) uses the data and basic approach in Estevadeordal, Freund, and Ornelas (2008) and finds that the strength of the tariff complementarity depends on the initial tariff levels. 2 Chang and Winters (2002) investigate the effects of the Latin American customs union MERCOSUR on excluded countries. They find that the excluded countries' firms' export prices to Brazil were influenced not only by the tariffs faced by them but also by the tariffs faced by their rival exporters.…”

“…Using the demand and supply functions in equations (2) and (4), as well as the no arbitrage and market clearing conditions in (6) and (9), we can obtain the equilibrium price, exports, and imports of good Z . To derive the implications of FTA formation on MFN tariffs of excluded countries, suppose country z forms an FTA with m − 1 countries, so that the FTA is of size m , and country c is a nonmember.…”