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Communication Costs and Trade in Sub Saharan Africa: A Gravity Approach

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Abstract

This paper investigates the effects of connectivity charges (communication costs) on bilateral exports in Sub Saharan Africa (SSA). Data from 19 exporter countries was used together with communication costs data in a gravity model of trade setup. The export data derive from the IMF Direction of Trade and the COMTRADE databases, while the communication cost data was collated from a variety of sources including direct contact with service providers. We find that communication cost is an important factor in bilateral trade in the region. Communications have a significant negative effect on export intensity. The study also reveals that countries with high communication costs generally have lower export intensity than countries with low communication costs. The results suggest that investment in ICT infrastructure that brings down international communication costs will have a positive effect on regional trade in the long run.

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Notes

  1. 1.

    Whether increased intra African trade and trade openness indeed have positive effects on growth in Sub-Saharan Africa is not addressed in the present paper. This remains an important avenue for future research.

  2. 2.

    page 12 in Chapter “Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?” appearing in Volume entitled “The Regionalization of the World Economy” from the from the National Bureau of Economic Research.

  3. 3.

    As mentioned in the previous section, only SSA countries are included in the analysis, in order to avoid the confounding effects of strong trade ties to former colonial countries. The focus is on intra-African trade.

  4. 4.

    We tested the results using PPP Dollar GDP figures and found similar results. We show the results obtained using current dollar figures because these were more readily available in a consistent format than the PPP Dollar GDP figures.

  5. 5.

    http://www.chemical-ecology.net/java/lat-long.htm

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Author information

Authors and Affiliations

  1. HSRC, 134 Pretorius Street, Pretoria, 0002, South Africa

    Evans Mupela

  2. UNU-MEIT, 19 Keizer Kareplein, Maastricht, The Netherlands

    Adam Szirmai

Authors
  1. Evans Mupela
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  2. Adam Szirmai
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Correspondence to Evans Mupela .

Editor information

Editors and Affiliations

  1. University of Luxembourg, Luxembourg, Luxembourg

    Tegawendé F. Bissyandé

  2. Scientific and Industrial Research and Development Centre, Harare, Zimbabwe

    Gertjan van Stam

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© 2014 Institute for Computer Sciences, Social Informatics and Telecommunications Engineering

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Mupela, E., Szirmai, A. (2014). Communication Costs and Trade in Sub Saharan Africa: A Gravity Approach. In: Bissyandé, T., van Stam, G. (eds) e-Infrastructure and e-Services for Developing Countries. AFRICOMM 2013. Lecture Notes of the Institute for Computer Sciences, Social Informatics and Telecommunications Engineering, vol 135. Springer, Cham. https://doi.org/10.1007/978-3-319-08368-1_4

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  • DOI: https://doi.org/10.1007/978-3-319-08368-1_4

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  • Publisher Name: Springer, Cham

  • Print ISBN: 978-3-319-08367-4

  • Online ISBN: 978-3-319-08368-1

  • eBook Packages: Computer ScienceComputer Science (R0)

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