Trade Creation and Trade Diversion Effects in the Economic Community of Central African States

Abstract

This paper analyzes trade creation and trade diversion effects in the Economic Community of Central African States (ECCAS) between 2007 and 2016 using the Gravity Model. The results show that variables like GDP, population, bilateral distance, political stability and corruption are crucial for the determination of bilateral trade flow. More importantly, the study finds that there is neither trade creation nor trade diversion in the ECCAS region. Thus, the FTA in ECCAS did not lead either to reinforce intra-trade or to emphasize trade with non-member countries. Yet, the Economic Community of Central African States (CEMAC), the Common Market for Eastern and Southern Africa (COMESA) and the East African Community (EAC) have been trade creating during the aforementioned period. Therefore, the paper recommends policy makers to promote more regional integration within ECCAS notably through the construction of intra-zone communication means and the effective establishment of the free movement of people and goods within the region.