Patterns of Comparative Advantage in Africa: Assessing Similarities and Differences
This trade brief applies several unsupervised statistical learning methodologies to determine the extent to which the nations of Africa converge (or diverge) in terms of their export comparative advantage patterns. This investigation is important because it can shed light on the viability of increased regional integration in Africa, and specifically the African Continental Free Trade Area. Where there is similarity in export comparative advantage, nations are usually competitors, but where there is a difference, there is the potential for enhanced trade integration. By conducting the distance analysis at a bilateral (or inter-country) level, far greater insights can be obtained than by simply looking at gross measures of divergence.
Even though most African countries show comparative advantage in the export of aggregate primary goods, there is diversity within the broad category of primary exports. This suggests that increased intra-African trade with current comparative advantage patterns is possible. At a REC level, the EAC and ECOWAS show greater complementarity in primary exports and potential for new intra-trade across their members than do either SADC or COMESA. However, in the case of SADC there is scope to increase trade between its more diversified and manufacturing economies.
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