Implications of Isolationist Policies on Regional Integration in Africa

Abayomi Olakojo, Solomon; Ogunkola, Emmanuel Olawale

doi:10.22059/ier.2022.86968

Implications of Isolationist Policies on Regional Integration in Africa

Authors

Solomon Abayomi Olakojo

Emmanuel Olawale Ogunkola

Department of Economics, University of Ibadan, Ibadan, Nigeria

10.22059/ier.2022.86968

Abstract

The renewed isolationist rhetoric among countries in the global north has implications for international trade integration. This study investigated the effect of isolationist measures on regional trade integration in Africa. The export supply function was estimated with a dynamic Markov switching model utilizing data between January 2005 and December 2018 for five African countries (Nigeria, Kenya, South Africa, Uganda, and Morocco). The results showed that the current isolationist policies have made Kenya and Uganda conduct more of intra-African trade; Uganda and South Africa to be more integrated into their regional economic trade blocs; and have generated a significant shift in the trade direction of Nigeria, South Africa, and Morocco in favor of non-traditional extra-African trade directions. The key drivers of intra-Africa trade integration are industrial production and relative prices. Hence, African countries need to deepen and synchronize industrial policies, target low inflation and reform their equity markets to foster higher industrial performance required for deeper intra-African trade integration.

Keywords

Isolationist Policies

Intra-African Trade Integration

Export Supply Function

Extra-African Trade

Markov Switching Model

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