Book Review

Yang, Yongzheng and Sanjeev Gupta (2005) Regional Trade Arrangements in Africa, Washington, DC: International Monetary Fund, ISBN1-58906-439-9, 46 pages. US$25.

Myron J. Frankman, Economics, McGill University, Montreal
Published in :  Canadian Journal of
Development Studies, 28 (no. 1, 2007), 165-66.


     Not surprisingly, the authors of this short essay, which appears with both the imprimatur of the International Monetary Fund and the usual institutional disclaimer, make the argument that the way ahead for Africa is through free trade and greater openness to foreign investment and that efforts to privilege regional trade agreements are misguided and likely to be counterproductive. In the manner of the baseball fable movie “Field of Dreams”, all Africa has to do is build it and they will come: “African countries need to strengthen their domestic supply response to take advantage of unprecedented opportunities to export to world markets.” (p. 28) Would that it were as simple as that. The necessary role that might be played in Africa by an increased flow of official development assistance is mentioned but once and at that in a paragraph that emphasizes “coherence between trade and development assistance.”  (p. 38)

    The discussion is driven by the trade-growth-poverty reduction association, although the authors admit that the link with poverty reduction is still a matter of debate  (p. 5, n.6).  Chapter 3 presents tables, graphs and the results of econometric studies of African trade arrangements. The econometrics forms the ostensible empirical core of the argument of the authors against diversion of resources into building regional trade arrangements (RTAs) in Africa. Nonetheless, the section which poses the question “Have RTAs Helped Increase Intraregional Trade?” contains an affirmation that the evidence is mixed and concludes by noting that “the econometric results should be interpreted with caution” (p. 18).  Mythology, however, trumps evidence when advice is to be given:

However, if the prosperity of some developing economies (e.g., Hong Kong SAR, Korea, Singapore, and Taiwan Province of China) over the past decades is any indication that multilateral liberalization can help poor countries achieve, Africa has a much higher stake in a successful Doha Round than a mercantilist approach to trade liberalization would suggest. (p. 30)

    Despite the “if”, the preceding quote is an affirmation, not a question.  To invoke the experience of the 4 East Asian Tigers as a guide to policy in Africa tests the credulity of the reader. Consider only the following.  In 1988-99 the Tigers had population densities ranging from a low of 424 people/km2 for South Korea to a high of 5,380 for Hong Kong. The average density for Africa in 2002 was 28, with only 4 of the continental African countries having densities in excess of 100 (landlocked Rwanda and Uganda, The Gambia and most populous Nigeria, with densities respectively of 281, 105, 129 and 141).  The 15 landlocked African countries face special problems: the 3 largest (Chad, Mali and Niger), all with population densities less than 10 people/km2 and all at or near the bottom of the UNDP’s HDI  rankings, have a total land area comparable to that of the 25 member expanded European Union.  To invoke trade liberalization as a panacea is simply one more “blame the poor” type policy prescription.

    The analysis is a narrow one that sees regional arrangements overwhelmingly from the trade perspective. Nonetheless, there is enough here to merit the attention of readers interested in regional integration in Africa. This slim volume can also serve to provoke classroom debate on strategies for Africa.  It is commonly argued, for example, that governments can utilize other taxes to replace the revenues lost by reducing tariffs. In fact, a study of the 25 year experience for 125 countries is reported to have found that low income countries recovered none of the lost revenue (p.35). In a table with data for various pairs of West African cities in 2000, we learn that there were 20 official highway checkpoints between Niamey in Niger and Ouagadougou in Burkina Faso, a distance similar to that between Montreal and Toronto, despite the fact that only one national border had to be crossed. 

    There is no need to buy this monograph as the almost identical text, which first appeared as an IMF Working Paper, can be downloaded at http://www.imf.org/external/pubs/ft/wp/2005/wp0536.pdf. In fact, Figure 1. The African Galaxy, which schematically shows the array of regional agreements, appears in more detailed form in the Working Paper. Those interested in African external trade and regional trade integration will find this a useful reference, a useful introduction and a useful foil.