Trade Flow, Creation, and Diversion Effects of Comesa

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In this paper, we take in hand two main issues: what determines trade flow among COMESA members and what effect COMESA has on its member countries, trade creation or diversion? Annual data for 20 African countries, 12 COMESA members and 8 non-members, and that of EU for the period 1999-2007 are used to estimate the gravity model employ"'d in the study. According to the findings from the study, the GDPs, population and language among other factors can explain export flows in our observation. We find that export flows among countries increase more than proportionately with GDPs. We also found that the geographic distance might impede trade rather more strongly in the context of COMESA. The other crucial finding is that COMESA has not produced the trade creation expected among its members. The major challenges faced by COMESA such as: overlapping membership and under developed infrastructures may explain this result. These results suggest the importance of improvement of trade facilities and infrastructures, which could strengthen the targets of regional agreements. Key words: COMESA, gravity model, trade flow, creation and diversion



COMESA, Gravity Model