Trade and development implications of the U.S. African growth and opportunity act

ABSTRACT

Trade agreements aim to boost exports among member nations. The U.S. African Growth and Opportunity Act (AGOA) targets enhanced trade between the U.S. and selected African countries. Unlike prior studies focusing on individual nations, our research evaluates AGOA’s overall and specific impacts on member-country exports and products. We employ the synthetic control method for estimation, with robustness checks using the difference-in-differences and event-study approaches. Analysing U.S.-AGOA trade data from 1993 to 2015, we find that AGOA member nations experienced an average annual export increase of $818.11 million, a significant 42% growth compared to expected levels without AGOA. The impacts varied across countries and exported product types: agricultural exports grew by 42%, mineral exports by 15%, and textile and apparel exports by 52% annually. Factors such as ICT infrastructure, institutional integrity, labour regulations, and macroeconomic indicators primarily influenced varied export gains among AGOA member countries. The heterogeneity in AGOA’s impact can be attributed to differences in beneficiary countries’ trade and economic characteristics. Our findings suggest that trade agreements like AGOA can yield positive effects, but careful consideration of various factors is necessary to maximize their benefits.

KEYWORDS:

• African growth and opportunity act
• synthetic control method
• difference-in-differences
• Sub-Saharan Africa

JEL CLASSIFICATION:

• F13
• F14
• Q17

Acknowledgment

We sincerely thank the Journal Editors and anonymous reviewers for their valuable comments, which greatly improved this paper. Deepest gratitude goes to Dr. Wenying Li and Dr. Wendiam Sawadgo for their unwavering support, guidance, and mentorship throughout this research. Thanks to Dr. Valentina Hartarska, Dr. Ruiqing Miao, Dr. Ash Abebe, and Dr. Jong Chung for their invaluable feedback and constructive criticism. Appreciation is extended to the attendees of the 2022 Agricultural & Applied Economics Association Annual Meeting in Anaheim, CA, for their insightful suggestions, which significantly contributed to refining the methodology and enhancing the clarity of our results.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Data availability statement

Data is available upon request.

Supplemental data

Supplemental data for this article can be accessed online at https://doi.org/10.1080/00036846.2024.2364084.

Notes

¹ United Nations Economic Commission for Africa.; African Union Commission (2012–03). Economic Report on Africa 2012: Unleashing Africa’s Potential as a Pole of Global Growth. Addis Ababa: UNECA. https://hdl.handle.net/10855/21725.

² South Africa, Angola, Nigeria, Ivory Coast, Kenya, Madagascar, Ghana, Republic of the Congo, Cameroon, Lesotho, Namibia, Ethiopia, Zambia, Niger, Botswana, Tanzania, Mozambique, Uganda, Malawi, Rwanda, Burkina Faso, Benin, and Togo.

Additional information

Funding

This research was supported by the Alabama Agricultural Experiment Station and the Hatch program of the National Institute of Food and Agriculture, U.S. Department of Agriculture.