Does political regime influence bilateral trade in West Africa?

Abstract

Most regional trade agreements ascribe great importance to member country’s political regimes of which preference is given to democratisation. In this paper, we investigate the influence of political regimes on bilateral trade in West Africa. We exploit two different ratings for political regime: Freedom House and Polity IV and applied Poisson pseudo maximum likelihood estimation technique. The empirical results reveal that political regime is significant to trade determination. Result portrays that generally; democratic regime positively and significantly influences bilateral trade and is homogenous in export and import. In West Africa, being import dependent, such influence is only robust as importer. We further noted that the influence of political regime on bilateral trade depends on the region and level of income; favourable to high-income Western countries. The results further indicate that two countries of similar political regimes trade less which is consistent in West African region.

Keywords:

• Trade
• political regime
• democracy
• autocracy
• West Africa
• gravity

JEL Classification:

• F13
• F15
• P51

Disclosure statement

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

Notes

1 Generalized System of Preferences (GSP) is a non-reciprocal scheme under which developed countries grant preferential tariffs to imports from developing countries. Regional trade agreements (RTAs) are defined as reciprocal trade agreements between two or more partners. They include free trade agreements and customs unions. A currency union (CU) or monetary union (MU) encompasses two or more nations sharing the same currency without them necessarily having any further integration.

2 Trade openness is calculated as, $\frac{\mathit{export}+\mathit{import}}{\mathit{GDP}}$

Additional information

Notes on contributors

Nnanna P. Azu

Nnanna P. Azu obtained his PhD in International Trade from Dongbei University of Finance and Economics, Dalian, China. His research interests include but not limited to trade policies (especially with gravity model), regional integration, foreign direct investments and exchange rates. He is currently an adjunct lecturer with Department of Economics, Nile University of Nigeria, Abuja, Nigeria.

Maimuna Y. Muhammad

Maimuna Y. Muhammad is an assistant lecturer at Department of Economics, Nile University of Nigeria, Abuja, Nigeria, where she is currently studying for her PhD in Monetary Economics. She holds both MSc and BSc in economics.