Gravity model applied to intra-community trade in SADC and COMESA

Abstract We studied trade flows between the member states of SADC and COMESA, analyzing 27 countries that make up the two regions. In particular, we used a set of data from 1999-2022, specifying 4 different models, and the Hausman-Taylor estimator proved to be relevant in explaining intra-community trade between the two economic integration zones. However, the results suggest that there are positive impacts in the SADC countries. The pull factors translated into physical distance are relevant to intra-community trade between the SADC and COMESA member states. There is strong negative evidence related to the countries' industrial capacity, although there are negative impacts, mainly associated with the countries' low level of industrialization. On the other hand, external influence negatively affects intra-Community trade flows. We also estimated an alternative model, and the results show strong evidence of trade potential in the countries of South Africa, Namibia, Tanzania and Congo Brazzavile. On the other hand, SADC has lower trade potential compared to COMESA, for example, and we measured the intensity of trade between the member states and found higher trade intensity between Angola, Namibia and South Africa and significantly higher trade intensity between South Africa, Botswana, Lesotho, Malawi and Mozambique, i.e. considering bilateral intra-community trade. JEL classification: F00; C01; C02; C33 & C40.