Competitiveness and diversification of services exports in sub‐Saharan Africa

Abstract

Trade in services has become the most dynamic segment of international trade. This paper examines the competitiveness of services exports in sub-Saharan Africa (SSA) for the period 2005-2019 using revealed comparative advantage approach. The analysis shows that although SSA has a comparative advantage in traditional services, that is travel and transport, it has remained less competitive compared to other regions globally, and its share of world services exports is negligible. Moreover, SSA has not developed competitiveness in modern commercial services and, hence, continue to perform poorly. The results suggest only Nigeria and Kenya have so far developed comparative advantage in financial services. SSA's dismal performance of services exports can be attributed to various factors such as technological and infrastructure constraints, protectionist and regulatory barriers. There is need to rethink strategies of revamping and diversifying services esports to spur Africa's trade and economic transformation. These include leveraging the opportunities availed by the African Continental Free Trade Area (AfCFTA). Unexploited opportunities include Africa's rich cultural diversity, recreation, business and conferencing services.

Determinants of intra‐COMESA trade in services

“…Empirical works on Africa focus on the trend of services trade in Africa, describing the value of imports and exports, and major sectors and players (Ayoki, 2018). Were and Odongo (2023) explain sub‐Saharan Africa's competitiveness in services exports between 2005 and 2019. Econometric analysis has been done by Sawadogo et al (2023) and Ariu and Ogliari (2022).…”

“…A gap exists in the literature on trade in services, not only in COMESA but in the entire African continent. Works on trade in services in Africa have primarily been descriptive without thorough econometric analysis that reveals the causal effects (Ayoki, 2018;Were & Odongo, 2023). Some recent empirical studies have analyzed the role of trade in services in sub-Saharan Africa's export product diversification (Sawadogo et al, 2023) and the structure, growth, and determinants of service trade in Africa (Ariu & Ogliari, 2022).…”

Services' trade in Africa: Structure and growth

“…In terms of contribution, many papers study the features of trade in services (e.g., Ariu, 2016b;Breinlich & Criscuolo, 2011;Federico & Tosti, 2017;Gaulier et al, 2011;Jensen, 2011;Kelle, 2013;Walter & Dell'mour, 2010), while most of these studies have micro-data, they provide information for single developed economies, short time spans and can rarely compare the findings to goods trade. This paper contributes to this literature by describing the long-run evolution of service trade and services GVCs from the perspective of developing countries and with respect to trade in goods.…”