Analyzing the Efficiency of Trade in Africa: A Stochastic Frontier Gravity Approach to Assess Intra-African Exports Performance and Potential

The African integration projects established regional economic communities (RECs) to remove trade barriers and stimulate trade among the member countries. Our analysis aims to assess REC trading efficiency and explore trade potential. Assuming that any discrepancy between the observed trade level and the maximum predicted trade level is related to trade inefficiencies, the stochastic frontier gravity is estimated for a sample of 45 African exporting countries and their 43 African partners from 1996 to 2020. The results show low export efficiency among African countries, corresponding to sizable unexploited export capacities.