The Role of Trade Policies in Building Regional Value Chains - Some Preliminary Evidence From Africa
Regional value chains (RVCs) are considered as an important step towards greater integration into global value chains (GVCs), but African countries trade very little value added with each other. Based on the UNCTAD-Eora GVC database, this paper estimates a panel model from 2006 to 2012 for 37 African countries and sheds light on the role of trade costs in building RVCs in Africa. First evidence is provided for a significantly negative effect on foreign value added of charged tariffs on capital goods and higher time to trade. In addition, higher regulatory quality and a stronger telecommunication infrastructure seem to be positively correlated with a country's ability to participate in RVCs.