18 Africa in the New Trade Environment
substantial, even in high-income countries (Borchert, Gootiiz, and Mattoo 2014; OECD 2021). Using World Bank Enterprise Surveys data, Hoekman and Shepherd (2015) examine how services productivity affects the productivity of manufacturing firms and the relationship between the manufacturers’ productivity and firm-level export performance. They find a strong link between services and manufacturing performance, with the link being stronger for firms that use services inputs more intensively. At the average rate of services input intensity, they estimate that a 10 percent improvement in services productivity was associated with a 0.3 percent increase in manufacturing productivity and a resulting 0.2 percent increase in exports. At the sectoral level, they find that restrictions on transportation and retail distribution services had the largest negative impact on goods export performance. A developing region such as Sub-Saharan Africa cannot afford to constrain its growth because of poorly performing services trade. It is therefore important to assess thoroughly the state of services liberalization in the region and estimate the productivity forgone by restricted services sectors, determining more specifically which dimensions of the economic governance and institutional frameworks are relevant in shaping the effects of services trade policies. Analysis to better understand the regulatory and trading institutions affecting the quality of services trade is therefore necessary to be able to identify specific policy implications and recommendations. Such an exercise cannot be performed with only country-level variables. Instead, data on sector-specific governance institutions must be collected and matched with services-specific trade policy measures to assess how the services restrictiveness measures interact with different country characteristics and institutional variables—both horizontal (such as those related to competition p olicy) and sector-specific (such as those related to regulatory regimes). Chapter 7 of this book provides some preliminary results.
How Can Sub-Saharan African Countries Boost Exports through Preferential Access to the EU and US Markets? Develop Institutions and Infrastructure The first response comes from research conducted by the World Bank’s Office of the Chief Economist of the Africa Region and the Macroeconomics, Trade, and Investment Global Practice (Kassa and Coulibaly 2019). This study examines the AGOA’s trade creation impact using the synthetic control method—a quasi-experimental approach (see chapter 1). The novelty in the approach is that it addresses problems of estimation that are prevalent in the nonexperimental methods used to analyze the impact of preferential trade agreements. The findings show that most of the eligible countries registered gains in exports owing to the AGOA, which compels all beneficiary countries to
