There is little econometric research that combines the competitiveness of African exports with ATRs. However, the available knowledge on the relationship between African exports/liberalization and productivity growth helps to highlight the impact of African ATRs on export competitiveness. Based on panel data from three African economies (Ghana, Kenya and Ethiopia), Mengistae and Pattillo (2004), exporters have a factor productivity premium of 11-28%. Jonsson and Subramanian (2000) note that trade liberalization has contributed significantly to growth through increased productivity in South Africa. As ATRs have not effectively promoted African exports as a whole, they are unlikely to have increased Africa`s export competitiveness (through productivity gains) relative to the rest of the world. In fact, the ATRs may have reduced Africa`s international competitiveness by diverting trade to RTA partners. In many ways, the effects of African ATTs are similar to those of an import substitution policy (albeit at the regional and non-national level), which protects local industries and reduces export incentives to world markets. In fact, the main reason for the creation of African (and not so early) PREMIERS has been industrialization through regional import substitution (Foroutan, 1993); Oyejide, 1997; Francois and Subramanian, 1999). African ATRs are largely motivated by the continent`s desire to promote growth through regional cooperation. Many African countries are small landlocked countries with inadequate infrastructure.11 Of the 53 African countries, 39 have fewer than 15 million people and 21 have less than 5 million (ECA, 2004). Although Africa has 12% of the world`s population, it produces only 2% of world production because of its low productivity. In 2003, sub-Saharan Africa`s GDP was 17% lower than Australia`s; if South Africa is excluded, Africa`s GDP is about the same as in Austria.
By creating larger markets, African countries should take advantage of economies of scale and strengthen domestic competition, increase investment returns and thus attract more foreign direct investment.12 Africa could achieve most, if not all, of the benefits by unilaterally liberalizing and/or participating in WTO-supported multilateral liberalization (Oyejide, 1997). African leaders also believe that the RTA would strengthen its negotiating power in international trade negotiations and that trade integration would help reduce regional conflicts. Thus, ATRs may have had a positive but uneven effect on intra-regional trade, even if the impact appears to be small or insignificant in the long run. RTAs also appear to have led to some diversion of trade, which may explain some of the decline in Africa`s share of world trade over time. Given the small share of intra-regional trade in Africa`s total trade, the direct contribution of possible trade diversion to overall trade performance should be limited; The overall business environment to which the ATRs have contributed is expected to have a significant impact. It is difficult to see that the ATRs have resulted in a less favourable trade regime than it would otherwise have been. Member States of a Customs UnionA customs union is an agreement between two or more neighbouring countries for the removal of trade barriers, the abolition or abolition of tariffs and the abolition of quotas.