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US Trade Preference and Export Performance of Sub-Saharan Africa (SSA): Evidence from the African Growth and Opportunity Act (AGOA)

Published online by Cambridge University Press:  14 July 2022

Belay Seyoum  and
Rebecca Abraham
Belay Seyoum*
Affiliation:
Nova Southeastern University – Business, Fort Lauderdale, FL 33314-7796, USA
Rebecca Abraham
Affiliation:
Nova Southeastern University – Business, Fort Lauderdale, FL 33314-7796, USA
*
*Corresponding author: Email: [email protected]
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Abstract

The African Growth and Opportunity Act (AGOA) was signed into law in May 2000 to encourage increased trade and investment between the United States and Sub-Saharan Africa (SSA). It provides eligible countries with duty free access to the US market for over 1800 products in addition to those available under the Generalized System of Preferences (GSP). The benefits extend through 2025. This study explores the link between US trade preferences under AGOA and beneficiary country exports. Using a large US import database, the study examines the extent to which AGOA influences export performance. It also examines the moderating roles of rule of law and foreign direct investment. The results largely indicate that AGOA has a positive and significant effect on beneficiary country exports. It also shows that rule of law moderates the relationship between AGOA and export performance. We believe that AGOA will target foreign direct investment (FDI) to SSA from other advanced regions such as the EU to take advantage of the US market. However, the role of FDI appears to be weak in moderating the relationship between trade preferences (tariff concessions) and exports from beneficiary countries to the US market.

Keywords

AGOAtrade preferenceFDIrule of lawexports
Type
Original Article
Information
World Trade Review , Volume 21 , Issue 5 , December 2022 , pp. 573 - 596
Copyright
Copyright © The Author(s), 2022. Published by Cambridge University Press

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