The Impact of Regional Economic Integration on Bilateral Trade in West and Southern Africa: A Comparative Study of ECOWAS, SADC and EU Preferential Trade Agreement

Regional Trade Agreements have been proliferating exponentially in Sub-Saharan Africa and the world at large, mostly following the European Union model. With developing countries’ share of world trade and output dwindling, regional economic integrations, in the forms of South-South and (or) North-South have been resorted to. However, there have been two concerns about the impact of the South-South RTAs. First, based on the classical theory of international trade, the South is not expected to trade much among themselves because of similar factor endowment. Second, is the welfare implication of trade creation versus trade diversion of the RTAs. With regards the second concern, it has been asserted that the welfare implications as based on traditional Viner’s analysis is of limited relevance to SSA because its overly concentrated on static gains, through consumption, to the neglect of dynamic gains, through growth. This paper investigates only the first concern of the impact of ECOWAS and SADC RTAs on bilateral trade because the dynamic gain which is relevant to LDCs has a longterm growth effect thereby making measurement difficult. The study finds that these blocs have contributed significantly to intra-regional trade flow contrary to classical international trade theory. However, SADC as a bloc has contributed more to intra-regional trade than ECOWAS. Additionally, the study finds that overlapping membership may undermine the efforts of the regional integration process if member states belong to another major RTA. Overlapping membership contributed positively to ECOWAS’ impacts on bilateral trade while it has no impact in SADC. -- Relevance to Development Studies -- With developing countries saddled with slow economic growth and development, increasing exports have been identified as one of the major channels to improve their economic fortunes. Thus, for policy makers and governments, policies that are directed at improving their trade performance both at regional and international level will be of immense relevance. With formations of RTAs contributing to large market size and increasing the competiveness of their products, this will go a long way in propelling economic growth that will bring about the overall development of member states.