CHAPTER 1
Trade Impact of the AGOA: An Aggregate Perspective Souleymane Coulibaly and Woubet Kassa
Introduction Since the introduction of the Generalized System of Preferences (GSP) in the 1970s,1 there has been widespread interest in understanding the impacts of nonreciprocal trade preferences provided to Sub-Saharan African countries. This interest stems from robust evidence that expansion of trade boosts growth and development. Recent economic growth success stories in countries including China, the Republic of Korea, Malaysia, and Singapore are often attributed to those countries’ effective participation in international trade (Commission on Growth and Development 2008; Connolly and Yi 2015). Firms’ participation in global trade spreads the benefits of new technology to improve overall welfare (Segerstrom 2013). The rise in exports following improved access to foreign markets may lead to the growth of more-efficient firms, further inducing increased productivity among firms and across the economy (Melitz 2003). In addition, increased access to foreign markets, because it induces entry, yields increases in the productivity of industry. In line with this evidence, the United Nations Conference on Trade and Development (UNCTAD) has advocated for extension of the preferential trade access of least developed countries (LDCs) to high-income economies’ markets (UNCTAD 2012). A few preferential trade agreements (PTAs) have emerged, aimed at providing duty-free, quota-free market access for SubSaharan African countries’ exports. These include the GSP, the European Union’s Everything but Arms (EBA) preference program, and the US African Growth and Opportunity Act (AGOA). This chapter revisits the impact of the most important PTA in the region, the AGOA, which provides duty-free and quota-free access to the
35
