Agriculture and Food Global Value Chains in Sub-Saharan Africa: Does bilateral trade policy impact on backward and forward participation?

Baliè, Jean and Del Prete, Davide and Magrini, Emiliano and Montalbano, Pierluigi and Nenci, Silvia Agriculture and Food Global Value Chains in Sub-Saharan Africa: Does bilateral trade policy impact on backward and forward participation? EIC working paper series #3/2017 IMT School for Advanced Studies Lucca ISSN 2279-6894.

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Abstract

The most recent literature on international trade highlights the key role of global value chains (GVCs) in structural transformation, development and growth. The common perception is that Africa, unlike most Latin American and Asian countries, has neither been able to intercept the main changes in trade patterns nor enter massively into global production networks. This work provides some insight into this topic. Using the EORA Input-Output Tables, we analyze whether bilateral import tariffs and shifts in trade regimes associated with regional trade agreements affect the backward participation (i.e., the use of foreign inputs for exports) and forward participation (i.e., the use of domestic intermediates in third country exports) of the SSA countries’ agriculture and food GVCs. Our results show that, despite their low world trade shares, GVC participation in SSA economies is increasing over time, mainly upstream as suppliers of unprocessed inputs. Furthermore, we show that the value added demand for SSA agricultural products primarily originates from the EU and emerging countries rather than from regional partners. Finally, by making use of a “gravity-like” identification strategy, we also find evidence that bilateral trade protection significantly affects GVC backward and forward participation in agriculture and food. These results call for a refinement of trade policy priorities in SSA.

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