The impact of colonial ties of the trade relationships of African countries

This study aims to analyze the impact of colonial ties on the trade relationships of African countries and their trading partners and the mechanisms driving this effect. In this analysis, the researcher aims to contribute to the literature on colonial history and trade through updated data and to the larger conversations on the legacies of colonialism. Initial exploratory analysis was conducted using an OLS model with two-way fixed effects on trade data at the country-pair level from 1948 - 2019. The Difference-in-Difference method was then applied to analyze the impact of colonial history on country pairs in which the African country had been colonized but was independent in the year of observation. An extended diff-in-diff model, including interaction terms, was used to test mechanisms that may explain any found effect. When all African countries in a country pair are independent, trade increases by 0.201% relative to trade between county pairs where this condition is not met after independence, country pairs with colonial ties and an African importer trade 0.285% less than country pairs in which the exporting country is or has been the colonizer of the importing country, and the importing country has not gained independence. The negative effect of independence on the trade relationships of country pairs with colonial ties was found to be especially significant for country pairs in which the African country had, or has, a port used during the transatlantic slave trade, or a port used as the headquarters of a colonial trading company. Given the scale and growth of the African trade market, the researcher recommends that European policymakers increase efforts to expand trade with Africa and that organizations like the World Trade Organization account for additional factors, such as colonial history, in their guidelines and agreements to account for this effect.