In todayâs economically integrated world, trade matters more than ever before. Nations
are signing various bilateral trade agreements and are engaged in various form of
economic integration. Developing countries are also involved in economic integration
for vital developments. Free trade areas (FTA), which is a form of economic integration,
is formed by removing tariffs on trade among member nations leaving the autonomy in
setting their tariffs on trade with non-members. The Southern Africa Development
Community (SADC) became a Free Trade Area in 2008 for the economic integration of
members.
Literature reviews revealed that econometric models (gravity model in particular) have
not been extensively used to estimate the impact of free trade agreements on South
African agricultural trade at commodity level using disaggregated data. This study,
therefore, evaluates the impact of Southern Africa Development Community Free Trade
Agreements (SADCFTA) on South African agricultural trade using gravity model.
The study focuses on South African data for agricultural exports and imports with
SADC member countries and EU-15 countries for meat of bovine, maize and wheat
commodities from 2000 to 2011. These products were selected based on their
sensitivity, relative importance in terms of their contributions to the gross value of agricultural production, consumption and their tradability. The study used the gravity
modeling technique to analyse the impact of SADC free trade agreement. The applied
regression method used is the Poisson Pseudo Maximum Likelihood (PPML) estimator
to determine the significance of variables within the model. The PPML was preferred to
the ordinary least square (OLS) method of estimation. In the presence of
heteroskedasticity the standard OLS methods can severely bias the estimated
coefficients, casting doubt on the empirical findings. The PPML is robust to different
patterns of heteroskedasticity and provides a natural way to deal with zero values in
data.
The result shows that there has been a significant increase in trade for meat of bovine
and maize among SADC members. There has been a net trade creation and an
increasing intra-SADC bloc bias for meat of bovine. The intra-regional trade in maize
has also been stimulated by the implementation of the free trade agreements. The study
cannot identify any strong bloc effect in wheat trade. Therefore a trade diversion effect
was established.
The empirical findings of this study can be considered as an intermediate step to address
the relative trade creation and trade diversion effects. The study also signifies the
importance of analyzing the effects of SADCFTA for major agricultural commodities.
In order to assess the progress of the SADCFTA scheduled of full liberalization up till
the end of 2012, it is imperative that the study recommends carrying out further studies
to assess the full liberalization of trade in the agricultural sector.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:ufs/oai:etd.uovs.ac.za:etd-07222013-134750 |
| Date | 22 July 2013 |
| Creators | Fadeyi, Oluwatoba Akinsuyi |
| Contributors | Mr AA Ogundeji, Dr Y Bahta |
| Publisher | University of the Free State |
| Source Sets | South African National ETD Portal |
| Language | en-uk |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | http://etd.uovs.ac.za//theses/available/etd-07222013-134750/restricted/ |
| Rights | unrestricted, I hereby certify that, if appropriate, I have obtained and attached hereto a written permission statement from the owner(s) of each third party copyrighted matter to be included in my thesis, dissertation, or project report, allowing distribution as specified below. I certify that the version I submitted is the same as that approved by my advisory committee. I hereby grant to University Free State or its agents the non-exclusive license to archive and make accessible, under the conditions specified below, my thesis, dissertation, or project report in whole or in part in all forms of media, now or hereafter known. I retain all other ownership rights to the copyright of the thesis, dissertation or project report. I also retain the right to use in future works (such as articles or books) all or part of this thesis, dissertation, or project report. |
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