Economic Distance and Regional Integration in Africa

Abstract

Factors usually considered in models attempting to explain the economic growth of countries do not include geography as a determinant. One possible rationale for this omission is that geographic characteristics of a territory are considered part of its endowments, positive or negative. Furthermore, a country’s geographical features are viewed as constant and unchangeable or very costly to modify. However, the resulting omission of geography from growth models can be revisited in the context of regional integration arrangements on the grounds that change could affect the geographical dimensions of a country’s markets or alter its trading routes. If such transformations are sizable then they will impact economic growth and the model will require inclusion of geography in it. One avenue of inquiry, if geography matters, is the search for policy instruments related to it that are likely to help boost economic performance. A question that arises from the transformability of geography is whether it can be measured and how it would play a role in the production function and process of income formation and distribution. In such a case what would be the process leading to these changes. For a given regional integration member country, one key aspect of geography is the modification of the integrated territory in a manner that can provide benefits contributing to the welfare of its residents. Do such benefits exist and how do they motivate the decision of countries to enter into one geographical form of regional integration rather than others. The empirical model of the determinants of economic growth shows that geography affects negatively the economic performance for landlocked countries. The economic distance from seaports faced by landlocked countries translates into an economic cost that can be lessened through different strategies. Tackling economic distance gives rise to issues related to harmonization of production functions across member countries of the integrated region and to distinct economic strategies for integrated countries that are contiguous as opposed to countries that are dispersed.