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Intra-Africa agricultural trade, governance quality and agricultural total factor productivity: Evidence from a panel vector autoregressive model

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  • Espoir, Delphin Kamanda
  • Bannor, Frank
  • Sunge, Regret

Abstract

The African Continental Free Trade Area (AfCFTA) agreement was signed by at least 54 African countries and has the potential of lifting up to 30 million Africans out of extreme poverty, according to the World Bank (2020). The agricultural sector is regarded as a fertile ground for achieving the AfCFTA ambitions. However, agricultural productivity in Africa is low and falling. It is argued that intra-Africa trade and good governance can help increase agricultural productivity. Nonetheless, both are low, casting doubt on their ability to enhance agricultural productivity. This study attempts for the first time to examine the causal relationship between the intra-Africa agricultural trade, governance quality, and the agricultural total factor productivity (ATFP) for 47 countries over the period 1995–2018. We extend the analysis to regional economic communities (RECs) to understand the diversity in this relationship within the continent. Using the panel VAR model in the generalized method of moment (GMM) estimation approach, our results suggest a long-run equilibrium relationship between the three variables. Specifically, the results indicate that at the African level, intra-Africa agricultural trade has a statistically positive effect on governance quality and ATFP. In contrast, good governance has positive and negative impacts on ATFP and trade, respectively. We also find that ATFP positively influences intra-Africa agricultural trade and governance. At the RECs level, our estimations show significant heterogeneity in the three variables’ impacts. Based on our findings, we recommend a rapid implementation of the AfCFTA agreement. However, we suggest that the implementation should be idiosyncratic to each region’s structural economies. Furthermore, we encourage the promotion of good governance, particularly in agriculture policy implementation.

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  • Espoir, Delphin Kamanda & Bannor, Frank & Sunge, Regret, 2021. "Intra-Africa agricultural trade, governance quality and agricultural total factor productivity: Evidence from a panel vector autoregressive model," EconStor Preprints 235617, ZBW - Leibniz Information Centre for Economics.
    • Handle: RePEc:zbw:esprep:235617
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    Cited by:

    1. Neema Ciza Angélique & Vwima Stany & Philippe Lebailly & Hossein Azadi, 2022. "Agricultural Development in the Fight against Poverty: The Case of South Kivu, DR Congo," Land, MDPI, vol. 11(4), pages 1-24, March.
    2. Kamanda Espoir, Delphin, 2024. "Investigating the dynamic impacts of public debt on economic growth in the Democratic Republic of Congo: a case of quantile on quantile regression," MPRA Paper 122415, University Library of Munich, Germany.
    3. Espoir, Delphin Kamanda & Sunge, Regret & Bannor, Frank, 2021. "Economic growth, renewable and nonrenewable electricity consumption: A fresh evidence from a panel sample of African countries," EconStor Preprints 238063, ZBW - Leibniz Information Centre for Economics.

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    More about this item

    Keywords

    Agricultural trade; agricultural total factor productivity; governance; PVAR;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade

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