Does Intra‐African Trade Reduce Youth Unemployment in Africa?

Abstract

This study empirically estimates the effect of Africa's intra-regional trade on the burgeoning youth unemployment in the continent. This is necessary since very few studies have been undertaken in the particular context of African countries. To the best of our knowledge there are no studies exploring the intra-African trade-youth unemployment nexus in Africa. We investigate both the aggregate and gender-specific impacts. Our empirical estimates, using available cross-sectional time series data over the period 1980 to 2010, suggest that higher levels of intra-African trade reduce both the aggregate, female and male youth unemployment in Africa. In addition, our results show that domestic investment rate, institutionalized democracy, secondary education, inflation, economic growth, and higher urbanization tend to reduce youth unemployment both on the aggregate and gender-differentiated and therefore are good for youth unemployment reduction in the continent. On the other hand, higher real per capita GDP and to a lesser extent credit to the private sector have a significant positive effect on youth unemployment in Africa. Government consumption expenditure and foreign direct investment have an insignificant effect on both the aggregate level and the gendered level of youth unemployment in Africa. Based on these results, some policy recommendations are proffered. 286 something that warrants close scrutiny for its impact on the inclusiveness of growth. This has become more urgent in light of the changing trade patterns in favor of regional and South-South trade that are occurring and are expected to occur in the context of global rebalancing and continued sovereign debt crisis in Europe. Such changes will inevitably have impacts on the economic structure, employment and labor market institutions of African economies, and to inequalities within and between these economies.The gender-specific impact of intra-African trade cannot be ignored since female and male youth may be affected differently because of gender specific inequalities in labor markets and prevailing norms about the role of females and males in the society in general and the economy in particular. Thus, apart from the overall effect, this study also examines the gender-differentiated youth unemployment effects of intra-African trade. A key question is the extent to which intra-African trade reduces female versus male youth's unemployment rates. In addition, there is desire for finding out the gender-differentiated youth unemployment impacts of intra-African trade so as to respond to any adverse impacts and promote gender-equitable adjustments.Very few studies have been undertaken in the particular context of African countries and to the best of our knowledge there are no studies exploring the intra-African trade-youth unemployment nexus in Africa. 1 Thus, the key objectives of the study are: (1) to analyze the scale, trends and composition of intra-African trade and youth (overall, female and male) unemployment; (2) to quantitatively investigate the relat...

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