Economic diplomacy in Africa : the impact of regional integration versus bilateral diplomacy on bilateral trade

Abstract

The paper examines the impact of two main instruments of economic diplomacy - regional integration and commercial diplomacy - on export flows among African states. We test whether there is any evidence of a trade-off or complementary interaction between these two instruments in trade facilitation. We compare the effects of these two instruments of economic diplomacy on bilateral trade by employing a gravity model for 45 African states over the period 1980-2005. The results show that bilateral diplomatic exchange is a relatively more significant determinant of bilateral exports among African states compared to regional integration. We also find a nuanced interaction between these two instruments of economic diplomacy: the trade-stimulating effect of diplomatic exchange is less pronounced among African countries that shared membership of the same regional bloc. Generally, this could mean that there exists a trade-off between regional integration and commercial diplomacy in facilitating exports or a lack of complementarity between these two instruments of economic diplomacy.