Determinants of trade patterns and comparative advantage of processed agricultural products of SADC

The Southern African Development Community (SADC) countries in general are facing new challenges of realising the pre-recession economic performance. This is in addition to the normal challenges of reducing food insecurity and poverty, unemployment and to continue improving the living standards. Agriculture is at the centre of most of these activities that have high likelihood of making most contribution given the growing population, demand for food and growth in urbanisation. In addition the sector engages many people in rural areas, has many linkages with other sectors of the economy and utilises unskilled labour force. Therefore a thriving agricultural sector has a potential to have more inclusive growth than any other sector. The trade patterns of agricultural and processed products are evaluated using the Balassa revealed comparative advantage method and the augmented gravity model to determine factors that influence trade. The results show that the share of agricultural trade in SADC is higher than the world average, and thus SADC has comparative advantage in agriculture. However, there are concerns that over time some of the SADC member countries and the have been losing comparative advantage in agriculture. Such advantage in processed and high value agriculture products is low and applicable to few countries. The contributing factors are high trade costs due to poor infrastructure, corruption perception and high administrative requirements. The situation challenges and limits the sector’s potential to contribute further towards the economic growth and development. This also implies that potential gains from trade may not be fully realised.

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 Record created 2017-04-01, last modified 2018-01-23

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