The impact of trade on African welfare: Does seaport efficiency channel matter?

Abstract

This paper examines the role of seaport efficiency in the relationship between trade and welfare outcomes in Africa. Data on 28 African countries for the period 2006 to 2018 is employed while the system generalized method of moments estimation technique is used for the empirical analysis. The paper reveals that seaport efficiency and trade enhances welfare outcomes directly in Africa. More importantly, the paper finds that seaport efficiency complements trade to have its largest positive impact on welfare outcomes in Africa in both the short and long run periods. Based on these findings, we suggest that policies aimed at using trade to enhance welfare should pay a critical attention to efficiency of African seaports by increasing investment in seaport infrastructure, space for container vessels, container terminal capacity to reduce time delays at seaports, the number of total ship services, and port surfaces and depths of water areas to serve ships at seaports, is what officials of ports and harbour authorities, regional economic communities, the African continental free trade area, and other organizations that champions international trade should consider in their policy reforms.

Keywords

• Seaport efficiency
• Trade
• Welfare
• system-GMM
• Africa