Improving Export Competitiveness Through Free Trade: The Case of Africa

Abstract In this study, a sample of the largest economies in Africa is used to investigate the impact of free trade on export competitiveness, using panel data econometric techniques on data covering 2000 through 2018. Results from the Pooled Ordinary Least Squares regression and reinforced by the Fixed Effect Model show that the significant positive determinants of export competitiveness are openness, exchange rate, ICT-related infrastructure and the rule of law, whereas corruption and foreign direct investment are significant constraints. Although tariff was found to be positively related to export competitiveness, it is not a significant driver. It is recommended that African countries should initiate and promote policies that enhance the quality and quantity of infrastructure, its institutional environment (encompassing the rule of law and the capacity to address corruption), including attracting the right kind of foreign direct investment that facilitates the utilization of its vast natural resources and transfers suitable technology. JEL Classification Codes: F10, F15, R10