Growth In International Trade

Because of the major role International trade plays in the global economy, it has received much attention in the literature. It is among the fastest growing economic activities in the world and has a great impact on the majority of countries’ incomes. According to the World Bank trade accounts form a significant share of most countries’ GDP globally such that in 2013 it accounted for 59.45 per cent of the global GDP. Besides having economic influence, trade has global political and social influences based on the fact that lots of today’s negotiations and agreements have an implicit goal of trade. The recent growing ties between China and African countries can be a typical example to this.(search examples)

Growth in international trade in the

For both intra and inter African bilateral trade, African economies has had a relatively lower rates compared to countries in the other regions of the world. According to the World Bank, from 1980 to 2011, Sub Sahara Africa (excluding South Africa and Nigeria), exports grew at a mean annual rate of 0.1 per cent, while imports at 2.2 per cent. The mean value for the total trade as a ratio of GDP for the whole period was 55.9 per cent and had been declining at a mean rate of 0.01 per cent annually. The volume of trade as a ratio of GDP has been declining despite the fact that Africa’s GDP rate of annual growth has been 3.8 per cent on average for the whole period from 1960 to 2011 (WorldBank, 2013).

This has resulted into myriad studies that examine and analyse the reasons behind this trend. Under international trade much attention has focused on relating trade to some macro-economic variables like economic growth, total factor productivity, GDP per capita, inflation and governance to mention a few. The scope of these studies on Africa varies, some covers Africa as a continent (e.g. Asiedu, 2002; 2006; Wood and Mayer, 1998), groups of African countries (e.g. Zannou, 2010; Read and Parton, 2009) and few on individual African countries (e.g. Osakwe,

Economic growth in most of the African countries has been suffering from civil conflicts associated with political upheavals, weakening of the global economy, and decline in the world market commodity prices, volatile oil prices and the raising in food prices. The rising in oil prices have caused most of the persistent inflationary pressures in these economies as well as causing destructions in the purchasing power of national currencies and the economy as a whole.

However, since mid-1990s the economic growth in Africa begun to increase steadily. This was stimulated by the improved political, microeconomic stability as well as the microeconomic reform efforts that were undertaken by various African economies during that decade. Despite this growth, to many of these countries this was the recovery from the devastating civil wars and long periods of economic decline since the oil crisis in the early1970’s. To countries like Botswana and Morocco, these economic growths were the result of significant investments in the 1970s and 1980s. Besides, the rising of demand for commodities have been driving investors around the world to go for Africa's natural resources and to forge new types of partnerships with African economies. With this, Africa has been gaining greater access to international capital. However, weak institutions for conflict management and ethnic divisions still result into persistent problems in Africa. These conditions have acted and continue to act as a