How the African Continental Free Trade Area impacts firms’ export survival: Some lessons from Kenya


Majune S. K., Türkcan K., Moyi E.

JOURNAL OF INTERNATIONAL TRADE AND ECONOMIC DEVELOPMENT, no.1, pp.1-24, 2023 (SSCI)

  • Publication Type: Article / Article
  • Publication Date: 2023
  • Doi Number: 10.1080/09638199.2023.2201363
  • Journal Name: JOURNAL OF INTERNATIONAL TRADE AND ECONOMIC DEVELOPMENT
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus, Academic Search Premier, IBZ Online, International Bibliography of Social Sciences, ABI/INFORM, Business Source Elite, Business Source Premier, EconLit, Geobase
  • Page Numbers: pp.1-24
  • Akdeniz University Affiliated: Yes

Abstract

The potential benefits of the African Continental Free Trade Area (AfCFTA) have takencenter stage in recent policy and scholarly debates. We contribute to this discussion bydrawing insights from our assessment of the current levels of export survival across thefollowing agreements: the Common Market for Eastern and Southern Africa (COMESA),the East African Community (EAC), and the overall economic integration agreement(EIA). Using monthly firm-product-destination customs transaction data from Kenya forthe period January 2006 to December 2017, we find that the average duration of trad-ing is longer under an agreement than when there is no agreement in place by 1.12months. The mean duration of exporting under EAC exceeds that of COMESA by 1.47months. The probit regression results with random effects reveal that trade agreementsreduce the hazard rate for exports. However, the effect differs depending on the agree-ment’sdepthandextent:TheeffectisnegativefortheEACandpositivefortheCOMESA.We also find that the ‘timing’ effect differs depending on the nature of the agreement.Overall, while the AfCFTA may expand market access, it might not guarantee low failurerates for exporters.