Regional trade integration and poverty reduction in Africa: do complementary policies matter?

Abstract

This study examines the impact of regional trade integration on poverty reduction in 50 African countries from 1995 to 2019, using a two-step system GMM approach. The findings indicate that increased intra-regional and intra-continental trade can accelerate poverty reduction. However, the effectiveness of trade integration depends on complementary policies, such as improving institutional quality, infrastructure, business regulations, financial development, and trade facilitation. Without these, greater integration may exacerbate poverty. The study underscores the importance of governance reforms, infrastructure development, access to finance, and trade facilitation as key priorities for African governments to maximize the poverty-reducing benefits of intra-African trade.