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Commonwealth Trade Policy Discussion Papers

The Commonwealth Trade Policy Discussion Papers series promptly documents and disseminates reviews, analytical work and think-pieces to facilitate the exchange of ideas and to stimulate debates and discussions on issues that are of interest to developing countries in general and Commonwealth members in particular. The issues considered in the papers may be evolving in nature, leading to further work and refinement at a later stage.

English

Trade-led Regional Value Chains in Sub-Saharan Africa

Case Study on the Leather Sector

Regional integration through regional value chains (RVCs) can help sub-Saharan Africa to trigger structural transformation in its economies. The leather and leather products (LLP) industry provides a tremendous opportunity for the region to form RVCs and, in the process, create more value-addition in exports and generate higher employment. In this context, the study identifies potential RVCs that can be formed in LLP in three subregional regional trading blocs, namely COMESA, ECOWAS and SACU. The estimated dynamic gravity model created as part of the study for the period 2002–2011 shows that the region can more than double its intra-regional trade. Three lists are identified for each country, indicating the ways in which the country can link into RVCs. The first is a list of outputs or finished leather products where the country has potential to export to regional and global markets. The second is a list of inputs, i.e. primary and processed leather, that can be sourced by the country from the region at a lower cost than from outside the region. The third is a list of leather and leather products where the country needs foreign direct investments to engage in an LLP RVC. The paper identifies policies at country and regional levels for promoting and initiating RVCs, as well as suggesting policies for promoting intra-regional foreign direct investments in leather industry.

English

Keywords: regional value chains, Commonwealth, foreign direct investment, trade, leather products, Sub-Saharan Africa, structural transformation
JEL: O55: Economic Development, Innovation, Technological Change, and Growth / Economywide Country Studies / Economywide Country Studies: Africa; F15: International Economics / Trade / Economic Integration; F14: International Economics / Trade / Empirical Studies of Trade; O38: Economic Development, Innovation, Technological Change, and Growth / Innovation; Research and Development; Technological Change; Intellectual Property Rights / Technological Change: Government Policy; O24: Economic Development, Innovation, Technological Change, and Growth / Development Planning and Policy / Development Planning and Policy: Trade Policy; Factor Movement; Foreign Exchange Policy
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