Trade and investment policy in Africa

Abstract

The studies have focused on empirically assessing the various theories linking trade with endogenous growth. An essential element of these models is the idea that knowledge will diffuse across borders making it possible for firms in one country to benefit from research and development activity done abroad. However, the extent to which these knowledge spillovers actually occur has been an open question. While modern trade theorists employ a much richer and more complex set of theories of trade, the Heckscher-Ohlin version still underpins the approach of most economists and policy-makers when confronting trade policy issues. It focuses on industries and markets where economies of scale or other imperfectly competitive features create natural barriers to entry for potential newcomers. This work has shed new light on factors that determine trade flows in differentiated products and intra-industry trade. The purpose of this paper is to try and understand the role “trade “and “investment” can play in the development of African economies within the framework of the ongoing “globalization” and “liberalization" of the world economy.