Journal of Global Economics

Trade Measures of OECD Countries and the Decline in Exports of African Countries: Is Murky Protectionism Responsible?

Abstract

Adugna Lemi

Since the onset of the recent global financial crisis and the resulting trade downturn, there have been efforts to understand the channels through which financial crisis has been affecting global trade and to explain the overall welfare impact of the crisis. Most previous studies focus on finding the key factors that link the financial crisis to the trade crisis. Specifically, the role of limited access to trade credit, murky protectionism, behind-the-border measures, and fluctuations in demand components are implicated as the leading contributors to the downturn. The purpose of this study is to investigate the significance of two of these factors, namely, murky protectionism and demand components, in the context of trade among OECD and African countries during the crisis years. Author has drawn commodity-level data on bilateral trade flow and trade measures from the OECD and GTA databases, respectively, to empirically investigate the impacts of OECD countries’ demand components and murky protectionisms on imports from African countries. The results confirm that OECD countries’ demand components played a relatively lesser role in the downturn of imports from African countries, whereas trade measures, especially tariffs, quotas, and the so-called ‘trade defense measures’ had significant negative effects on OECD imports from African countries. GTA’s evaluation of the trade measures, in terms of the nature of their likely impacts on trade flows, is, however, not confirmed in this study.