Market Integration and Cost of Borders in Africa

Abstract

Africa's colonial border design has been understood to be associated with detrimental contemporary socio-economic outcomes. Little attention however has been paid to the implication of those borders to intra-regional trade and thus economic growth. In this paper we examine whether the removal of fragmented international borders in Africa improves the welfare of neighboring countries. Using a spatial general equilibrium model developed by Fajgelbaum and Schaal (2020), we show that existing links that are consequential for international trade are under-invested in both East and West Africa. Our framework will provide important policy-relevant insights given that a range of countries in Africa are trying to lessen trade friction across the borders by forming free-trade areas and currency unions.