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Trade related business climate and manufacturing export performance in Africa: A firm-level analysis

Edwards, Lawrence and Balchin, Neil (2008): Trade related business climate and manufacturing export performance in Africa: A firm-level analysis. Published in: Journal of Development Perspectives , Vol. 4, No. 1 (October 2008): pp. 67-92.

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Abstract

Africa continues to be marginalised in world trade of manufactured goods, despite reductions in tariffs and non-tariff barriers. This paper investigates whether high business and trade costs associated with Africa’s trade-related infrastructure, trade institutions and the regulatory environment have contributed towards its mediocre trade performance. The paper focuses on eight African countries - Egypt, Kenya, Madagascar, Mauritius, Morocco, South Africa, Tanzania and Zambia - using the World Bank’s investment climate surveys. The results of the study suggest that the business climate, as measured using principal components for micro-level supply constraints, macroeconomic conditions and the legal environment, is closely associated with firm-level export propensity. Improvements in domestic policy may therefore have a considerable positive impact on manufacturing export performance in Africa.

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