This paper examines whether regional trade and regional infrastructure have long-lasting effects on firm-level productivity, which is a crucial link in the theory of change from regional infrastructure to sustained poverty reduction.
Firm-level panel data (Malawi, Rwanda, Senegal and South Africa) show regional exporters have a higher level and growth in productivity. New econometric evidence for sub-Saharan Africa also finds firms in countries with better regional infrastructure have higher productivity.
Policy should focus on improving regional infrastructure. Attention should go not only to reducing clearing costs at different border crossings but also to reducing the large spread in costs among firms using the same gateway.
te Velde, D.W. Regional trade and infrastructure and firm-level productivity in Sub-Saharan Africa. ODI, London, UK (2015) 31 pp.