Transcript Impact of Regional Integration on Trade and Firm Performance in

UNCTAD Workshop on Trade and Poverty
Impact of Regional Integration on Trade
and Firm Performance in West Africa: The
Case of Benin
Dar es Salam, November 19-23, 2007
Dr Toussaint Houeninvo
National School of Applied Economics and Management
University of Abomey Calavi (Benin)
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Presentation Outline
1-The Country at a glance, the Research Question and objective
of the study
2- The chosen data and methods
3- Main findings of the research and the questions raised
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1-The Country at a glance, the research question
and the objective of the study
• Benin is a small country within West African Economic and
Monetary Union (WAEMU)
• The country population size estimated at 8.7 million as of today
was 5.8 million in 2000 when the study has been initiated
• At geographical level the country size is 116 000km2
• It is a Least Developed Country.
• As a founding member of the WAEMU Regional Trading Block,
Benin signed the treaty establishing the WAEMU in 1994 and
adopted a Common External Tariff in January 2000
• There has been a big debate arising mainly from private sector and
civil society stakeholders on any benefit of Benin membership as a
small member country
• Hence the research question: Can a small country benefit from a
RTA
• Such a question put policy makers (at national and regional) level
under fire on the issue of implementation of RTAs.
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1-The Country at a glance, the research question
and the objective of the study (cont..)
• The objective of the study (initiated in 2000) was to evaluate the
impact of the relatively newly formed WAEMU on Benin through
the main preferential treatment of the Union named Preferential
Community Tax (PCT).
• Since 1996 WAEMU member countries have decided to remove
all non-tariff barriers (NTB) and reduce progressively tariff
barriers among themselves in order to boost intra-community
trade.
• The schedule of tariff reductions within the framework of PCT
(applied to industrial products) is as follow:
• 30% between July 1st 1996 and June 30th 1997; 60% between
July 1st 1997 and December 31st 1998; 80% between January 1st
1999 and December 31st 1999 and 100% since January 2000
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2- Chosen data and methods
• The « before » and « after » approach to assess the impact of PCT
• Hence performance indicators “before” and “after” signing the RTA
have been compared to measure impact
• The Treaty being signed in 1994 and PCT introduced in 1996, 19931996 has been considered pre-RTA and 1996-1998 post-RTA.
• Then we used 4 different methods
• Elasticity of intra and extra trade (import demand to GDP) “before”
and “after” RTA to see if there is trade creation or trade diversion
(Balassa 1967):
• Also degree of overall openness: intra and extra regional, X and M
• ( de Melo et al 1993)
• Degree of openness at disaggregate level following the 4 product
categories scheme of WAEMU: “Crude products”, arts and crafts,
qualified industrial products and non qualified industrial products
• Value added and labor productivity of qualified and non qualified
firms (competitiveness indicators based on Firm survey)
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3- Main findings of the research and questions it
raised
• Despite the small size of its economy, Benin has the ability to
benefit from WAEMU regional integration system particularly in
the areas of two of the four WAEMU categories products: arts and
craft and qualified industrial products.
• If the analysis has stopped at aggregate level one might conclude
that Regional Integration did not benefit Benin. Furthermore
disaggregate analysis indicates opportunities for business activities
• Value-added and labor productivity are higher in PCT qualified
firms than non qualified ones.
• There is a low participation of the firms of the country in the
Preferential tax program of the Union and this is due to information
asymmetry.
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3- Main findings of the research and questions it
raised (end)
Questions raised regarding policy implication and further research
needed
• Information disclosure and implementation of RTA
• Regional statistical registration and monitoring
• investment in infrastructure necessary for the enhancement and
the normalisation of production
• Implementation of good competition policy in order to increase
trade in practice following tariff reduction and preferential
treatment scheme and transfer price decrease benefits to
consumers.
• Create a better investment climate to increase employment and
reduce poverty
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Thank you
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