BRICS AND SUB-SAHARAN AFRICA TRADE INTERDEPENDENCE AND PEACE: EVIDENCE BASED ON REVEALED COMPARATIVE ADVANTAGES
DOI:
https://doi.org/10.25159/2520-9515/355Keywords:
BRICS, economic integration, merchandise exportation, peace and stability, revealed comparative advantage, structural transformation, sub-Saharan AfricaAbstract
This study examined economic integration through trade between BRIGS (Brazil, Russia, India, China and South Africa) countries and sub-Saharan Africa. The study examines the comparative advantages of the two economic blocks with respect to the exportation of merchandise (food, agricultural raw materials, fuels, ores and metals, and manufactures). The findings of this study reveal the actual status of these two regions as economic partners in each of the five subsectors of merchandise exports.
The  trend  shows  that,  with  the  exception  of  manufactures  exports, the competitiveness of all subsectors of the merchandise  exports of BRIGS is characterised by a  declining  trend.  BRIGS has  a  comparative advantage in the world in the exportation of manufactures and fuels, and comparative disadvantage in the export of food, agricultural raw materials, and ores and metals.  Interestingly, manufactures are  continuously  and consistently  in a steadily rising trend. This is evidence that BRIGS's structural transformation towards higher valued-added commodities is proceeding well, which means that policy makers should be considering ways of enhancing it further.
In the case of sub-Saharan Africa, with the exception of manufactures exports, it is found to have comparative advantages in all merchandise exports. Sub- Saharan Africa’s competitive advantage is the highest in the exportation of ores and metals, followed by fuels, agricultural raw materials and food. Sub-Saharan Africa has a comparative disadvantage in the export of manufactures throughout the period considered in this study. This implies that the prospects of structural transformation to downstream of the higher value-added commodities export part of the supply chain are good: the slow pace of transformation towards higher value-added goods should therefore be demanding the attention of policy makers. The study has revealed that sub-Saharan Africa is more competitive than BRICS in the exportation of ores and metals, fuel, agricultural raw materials and food. On the other hand, BRICS is more competitive than sub-Saharan Africa in the export of manufactures.
The study has also revealed that significant economic integration can be sustained  between  BRICS  and  sub-Saharan  Africa  in  the  exportation  of all merchandise subsectors. Specifically, sub-Saharan Africa is a potential destination market for BRICS’s exports of manufactures. Conversely, BRICS is also a potential destination market for sub-Saharan Africa’s exports of ores and metals, fuel, agricultural raw materials and food.
Economic integration between BRICS and sub-Saharan Africa favourably influences peace and stability in the regions. Sustaining peace and stability in these regions also favourably influences the wellbeing of the communities.
References
Avdan, N. 2014. Controlling access to territory: Economic interdependence, transnational terrorism, and visa policies. Journal of Conflict Resolution 58(4): 592–624. DOI: https://doi.org/10.1177/0022002713478795
Balassa, B. 1965. Trade liberalization and revealed comparative advantage. Manchester School 33: 99–123. DOI: https://doi.org/10.1111/j.1467-9957.1965.tb00050.x
Beyene, HG. 2014a. Does international trade reduce political disputes? Unpublished paper, Institute for Dispute Resolution, University of South Africa, Pretoria, 1–20.
Beyene, HG. 2014b. Trade integration and revealed comparative advantages of Sub-Saharan Africa and South Asian merchandize export. Foreign Trade Review 49(2): 163–176. DOI: https://doi.org/10.1177/0015732514525170
Beyene, HG. 2014c. Trade integration and revealed comparative advantages of Sub-Saharan Africa and Latin America & Caribbean merchandize export. The International Trade Journal 28: 1–31 (forthcoming). DOI: https://doi.org/10.1080/08853908.2014.952851
Bhar, R & Nikolova, B. 2007. Analysis of mean and volatility spillovers using BRIC countries, regional and world Equity Index returns. Journal of Economic Integration 22(2): 369–381. DOI: https://doi.org/10.11130/jei.2007.22.2.369
Carmody, P & Hampwaye, G. 2010. Inclusive or exclusive globalization? Zambia’s economy and Asian investment. Africa Today 56(3): 84–102. DOI: https://doi.org/10.2979/aft.2010.56.3.84
Cooper, AF, Antkiewicz, A & Shaw, TM. 2007. Lessons from/for BRICSAM about South–North relations at the start of the 21st century: Economic size trumps all else? International Studies Review 9(4): 673–689. DOI: https://doi.org/10.1111/j.1468-2486.2007.00730.x
Dailami, M & Masson, PR. 2010. Toward a more managed international monetary system? Annual John W Holmes issue on Canadian foreign policy. International Journal 65(2): 393–409. DOI: https://doi.org/10.1177/002070201006500211
Dhar, B. 2012. The BRICS in the emerging global economic architecture. Occasional Paper No 125. Unisa: South African Institute of International Affairs, 1–16.
Goldin, I. 1990. Comparative advantage: Theory and application to developing country agriculture. OECD Working Paper 16: 12–17.
Hammouda, HB, Karingi, SN, Njuguna, AE & Jallab, MS. 2010. Growth, productivity and diversification in Africa. Journal of Productivity Analysis 33(2): 125–146. DOI: https://doi.org/10.1007/s11123-009-0155-5
Harkness, I. 1975. Factors influencing US comparative advantage. Journal of International Economics 5(May): 153–165. DOI: https://doi.org/10.1016/0022-1996(75)90002-1
Hegre, H, Oneal, J & Russett, B. 2010. Trade does promote peace: New simultaneous estimation of the reciprocal effects of trade and conflict. Journal of Peace Research 47(6): 763–774. DOI: https://doi.org/10.1177/0022343310385995
Hentz, JJ. 2005. South Africa and the political economy of regional cooperation in southern Africa. The Journal of Modern African Studies 43(1): 21–51. DOI: https://doi.org/10.1017/S0022278X0400059X
Hillman, AL. 1980. Observations on the relation between ‘revealed comparative advantage’ and comparative advantage as indicated by pre-trade relative prices. Weltwirtschaftliches Archiv 116: 315–321. DOI: https://doi.org/10.1007/BF02696859
Kenen, P. 1965. Nature, capital and trade. Journal of Political Economy 73: 437–460. DOI: https://doi.org/10.1086/259069
Kowalski, P. 2011. Comparative advantage and trade performance: Policy implications. OECD Trade Policy Papers 121(5): 1–54.
Kowalski, P & Cepeda, RH. 2011. Production, consumption and trade developments in the era of globalization. In Globalization, Comparative advantage and the changing dynamics of trade. Paris: OECD Publishing.
Krugman, P. 1990. Rethinking international trade. Cambridge, Mass: MIT Press. DOI: https://doi.org/10.7551/mitpress/5933.001.0001
Leontief, W. 1965. Factor proportions and the structure of American trade. Review of Economics and Statistics 38: 37–46.
Liesner, HH. 1958. The European Common Market and British industry. Economic Journal 68: 302–316. DOI: https://doi.org/10.2307/2227597
Lu, L & Thies, CG. 2010. Trade interdependence and the issues at stake in the onset of militarized conflict. Conflict Management and Peace Science 27(4): 347–368. DOI: https://doi.org/10.1177/0738894210374410
OECD. n.d. OECD Trade Policy Papers, No 121. OECD Publishing. Available at http://dx.doi. org/10.1787/5kg3vwb8g0hl-en (accessed 20 August 2013).
Ricardo, D. 1817. On the principles of political economy and taxation. London: John Murray.
Russett, BM & Oneal JR. 2001. Triangulating peace: Democracy, interdependence, and international organizations. New York: Norton.
Schumacher, R. 2012. Adam Smith’s theory of absolute advantage and the use of doxography in the history of economics. Erasmus Journal for Philosophy and Economics 5(2): 54–80. DOI: https://doi.org/10.23941/ejpe.v5i2.105
Shaw, TM, Cooper, AF & Antkiewicz, A. 2007. Global and/or regional development at the start of the 21st century? China, India and (South) Africa. Third World Quarterly 28(7): 1255–1270. DOI: https://doi.org/10.1080/01436590701591804
Singh, SP. n.d. BRICS and the world order: A beginner’s guide, CUTS (Centre for International Trade, Economics and Environment) and Memory Dube (South African Institute of International Affairs). Available at http://cuts-international.org/BRICS-TERN/pdf/BRICS_ and_the_World_Order-A_Beginners_Guide.pdf (accessed 4 June 2014). DOI: https://doi.org/10.2139/ssrn.2443652
Smith, A. 1978. [1762]. Early draft of part of the wealth of nations. In RI Meek, DD Raphael & P Stein (eds) The Glasgow edition of the works and correspondence of Adam Smith. Oxford: Oxford University Press 5: 562–581. DOI: https://doi.org/10.1093/oseo/instance.00042879
Subramanian, A & Tamirisa, NT. 2003. Is Africa integrated in the global economy? Palgrave Macmillan Journals 50(3): 352–372.
Thakurta, PG. 2006. The sun rises in the East. India International Centre Quarterly 33(1): 126–137.
Tran, TA, Diaw, D & Rieber, A. 2012. International demand spill overs in South–South exports: Application to sub-Saharan Africa and developing Asia. Journal of Economic Integration 27(3): 410–436. DOI: https://doi.org/10.11130/jei.2012.27.3.410
Vollrath, TL. 1991. A theoretical evaluation of alternative trade intensity measures of revealed comparative advantage. Weltwirtschaftliches Archiv 127(2): 265–280. DOI: https://doi.org/10.1007/BF02707986
Weiner, RD, Roxo, T & Kellman, M. 2008. South Africa’s manufactured international trade in the post-sanctions epoch: Patterns and potentials. The American Economist 52(1): 86–95. DOI: https://doi.org/10.1177/056943450805200108
Wood, A & Mayer, J. 2001. Africa’s export structure in a comparative perspective. Cambridge Journal of Economies 25(3): 369–394. DOI: https://doi.org/10.1093/cje/25.3.369
Downloads
Published
How to Cite
Issue
Section
Accepted 2015-07-16
Published 2015-07-29
