Africa in the New Trade Environment

212 Africa in the New Trade Environment

Table 5.3 Correlation of Sub-Saharan Africa’s Exports to Asia versus Exports to Other Countries ln(Exports to ROW except Asia)

Dependent variable ln(Exp to Asia)

(1)

(2)

0.184*** (2.749)

0.151** (2.454)

ln(lmp from Asia)

ln(Exports to ROW except Asia-5) (3)

(4)

0.114** (2.626)

0.106** (2.446)

ln(Exports to ROW except China) (5)

(6)

0.0947*** (2.818)

0.0891*** (3.128)

0.204*** (4.073)

ln(Exp to Asia-5) ln(lmp from Asia-5)

0.139* (1.909)

ln(Exp to China) ln(lmp from China)

0.185** (2.594)

Year FE

Y

Y

Y

Y

Y

Y

Country FE

Y

Y

Y

Y

Y

Y

N

710

710

698

698

681

681

R2

0.957

0.958

0.956

0.957

0.957

0.959

Source: World Bank calculations.

Note: All independent variables are lagged one year. t-statistics, based on standard errors clustered at the country level, are in parentheses. The sample covers 46 Sub-Saharan African countries over 2000–15 (listed in annex 5A, table 5A.1). The “Asia-5” countries are Bangladesh, Cambodia, China, India, and Vietnam.

FE = fixed effects; ln = natural logarithm; ROW = rest of the world. * p < 0.10; ** p < 0.05; *** p < 0.01.

variable accordingly, by subtracting the exports to the Asia-5 nations from Sub-Saharan Africa’s exports to the rest of the world in a year, so that the positive correlation between (log) exports to Asia and those to the rest of the world is not spurious. Within an (exporting) country and year, a country’s (log) exports to the rest of the world are positively correlated with its (log) exports to and (log) imports from the Asia-5 countries, respectively.

These statistically significant results suggest that, instead of trade diversion, trade to Asia complements exports to other non-Asian countries. The elasticity of exports to the rest of the world in relation to exports to Asia-5 is smaller than that regarding exports to all of Asia. This is expected in light of the postulated spillover hypothesis. If internal and external economies of scale are the drivers, the positive effect of exporting to the entire Asian continent should be larger than exporting to only the Asia-5 countries.

Columns (5) and (6) in table 5.3 consider the potential crowding-out effect of exporting to China specifically. China has emerged as Sub-Saharan