164 Africa in the New Trade Environment
Megaregional Agreements Overall, the current trend for many countries is to come together into regional blocs that are significantly larger in trade and investments. These larger blocs are commonly referred to as megaregional trade agreements. Over the past few years, three major megaregional trade agreements have been under negotiation: 1. The Transatlantic Trade and Investment Partnership between the EU and the US 2. The Trans-Pacific Partnership between the United States and 11 countries in the Pacific Rim 3. The Regional Comprehensive Economic Partnership, which brings together the 10 members of the Association of Southeast Asian Nations (ASEAN) with six other countries in Asia and the Pacific, including India. On the implications for Sub-Saharan African countries, there is a legitimate concern about market loss and trade diversion. These megaregional trade agreements could erode preferences and increase competition for African countries in Asian markets. The next section looks empirically at how trading with different partners at different levels of development affects Sub-Saharan African manufacturing firms.
Does the Export Market Matter? A Literature Review Aw and Hwang (1995) and Bernard, Jensen, and Lawrence (1995) pioneered the literature on firm-level characteristics and export market participation. Scholars have sought to explore whether exporting enterprises have higher performance characteristics relative to nonexporters. Empirical studies on exporting and performance have been carried out for several high-income countries (Belgium, Denmark, France, Germany, Ireland, Italy, Portugal, Spain, Sweden, the United Kingdom, and the United States). However, there has been relatively little empirical work using firmlevel data on African firms. The studies that have been done tend to concentrate on a small number of countries. Examples include Mengistae and Pattillo (2004) for Ethiopia, Ghana, and Kenya; Bigsten et al. (2004) for Cameroon, Ghana, Kenya, and Zimbabwe; Van Biesebroeck (2005) for Burundi, Cameroon, Côte d´Ivoire, Ethiopia, Ghana, Kenya, Tanzania, Zambia, and Zimbabwe; and Bigsten and Gebreeyesus (2009) for Ethiopia. These studies find that exporters generally perform better than nonexporters. The positive productivity premium for exporters can be explained through two alternative but not mutually exclusive hypotheses: self- selection and learning by exporting. In the self-selection hypothesis, the causality runs from productivity to exports. The most productive firms “self-select” into the export market, in the sense that they raise productivity before (not after) their entry into
