Experience with regional integration in Africa: Challenges and opportunities

Two major theoretical motivations for the formation of trade blocs are the allocation effect and the accumulation (or growth) effect of free trade within a regional bloc (Baldwin, 1997). With respect to the allocation effect, economic theory shows that, in a competitive economy, the demand for a good directs productive resources to the production of that good. Hence, demand is an important signal between consumers and producers. Given that the imposition of tariff and non-tariff barriers between countries interferes with this signal, the removal of such trade barriers in the context of regional integration is thought to increase efficiency in resource allocation.

Sustainable Development Goals:

Decent Work and Economic Growth

Reduced Inequalities

Partnerships for the Goals