Effects of Trade Facilitation on Inequality: A Case Study of Sub-Sahara Africa

Ebenezer OLUBIYI

Abstract


Abstract. Inequality in the sub-Saharan Africa has been on the high side compared to other regions of the world. The policy makers in the region are aware of this and have implemented several policies to stem it. Among the solutions is inclusive growth and strong trade reforms. However, the trade position is still not encouraging even though it is rising.  One major factor inhibiting trade and hence inequality is costs attached to the movement of goods across border, that is, trade facilitation. This study investigated the effectiveness of trade facilitation on inequality in a panel of 38 SSA countries spanning from 2005 to 2012. The results show that not all trade facilitation variables contribute to reduction in inequality. While reduction in time required to export significantly reduce inequality, time required to import, and to set up a new business worsened inequality. Custom efficiency is effective and has positive impact on inequality, that is, inequality is less, and the more efficient Customs are. Following these findings, authorities in the region will do well in addressing inequality issues by paying more attention to transaction challenges facing exports and custom efficiencies.

Keywords. Inequality, Trade facilitation, Generalized method of moments, Logistic index.

Jel. D63, F18, B23, F13.

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DOI: http://dx.doi.org/10.1453/ter.v2i3.479

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