The Cost of Non-Integration: Evidence from Nigeria Opting Out of an Economic Partnership Agreement with the EU
(2022) NEKP01 20221Department of Economics
- Abstract
- Trade integration is thought to benefit developing countries, so what is the cost of staying out of trade agreements? This paper studies the case of Nigeria, which, like its neighbours in West Africa and other ACP countries, has the option of entering an Economic Partnership Agreement (EPA) with the European Union (EU), but has chosen not to. Hence, this study investigates the question: Would Nigeria have exported more to the EU if it had indeed entered an EPA? To answer this, I employ the Synthetic control method (SCM), using the exports of the other EPA-eligible countries that did indeed join an EPA to construct plausible synthetic export flows for Nigeria. The results show that actual Nigerian export flows to the EU underperform against... (More)
- Trade integration is thought to benefit developing countries, so what is the cost of staying out of trade agreements? This paper studies the case of Nigeria, which, like its neighbours in West Africa and other ACP countries, has the option of entering an Economic Partnership Agreement (EPA) with the European Union (EU), but has chosen not to. Hence, this study investigates the question: Would Nigeria have exported more to the EU if it had indeed entered an EPA? To answer this, I employ the Synthetic control method (SCM), using the exports of the other EPA-eligible countries that did indeed join an EPA to construct plausible synthetic export flows for Nigeria. The results show that actual Nigerian export flows to the EU underperform against the synthetic export flows with approximately 37 percent. Remembering that the synthetic export flows represent the counterfactual world where Nigeria did enter an EPA, this suggests that the choice not to join an EPA has cost Nigeria substantial export opportunities. Furthermore, results also show that the trade effects of an EPA are gradual, not fully showing up until a few years after the agreement has been formally introduced. The results are robust to a large number of alternative estimation strategies, such as several specifications of the Difference-in-differences model and sensitivity tests. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9102169
- author
- Svensson, Kevin LU
- supervisor
- organization
- course
- NEKP01 20221
- year
- 2022
- type
- H2 - Master's Degree (Two Years)
- subject
- keywords
- ACP countries, Economic Partnership Agreement, European Union, Nigeria, Synthetic Control Method
- language
- English
- id
- 9102169
- date added to LUP
- 2022-11-03 09:24:03
- date last changed
- 2023-10-23 15:01:08
@misc{9102169, abstract = {{Trade integration is thought to benefit developing countries, so what is the cost of staying out of trade agreements? This paper studies the case of Nigeria, which, like its neighbours in West Africa and other ACP countries, has the option of entering an Economic Partnership Agreement (EPA) with the European Union (EU), but has chosen not to. Hence, this study investigates the question: Would Nigeria have exported more to the EU if it had indeed entered an EPA? To answer this, I employ the Synthetic control method (SCM), using the exports of the other EPA-eligible countries that did indeed join an EPA to construct plausible synthetic export flows for Nigeria. The results show that actual Nigerian export flows to the EU underperform against the synthetic export flows with approximately 37 percent. Remembering that the synthetic export flows represent the counterfactual world where Nigeria did enter an EPA, this suggests that the choice not to join an EPA has cost Nigeria substantial export opportunities. Furthermore, results also show that the trade effects of an EPA are gradual, not fully showing up until a few years after the agreement has been formally introduced. The results are robust to a large number of alternative estimation strategies, such as several specifications of the Difference-in-differences model and sensitivity tests.}}, author = {{Svensson, Kevin}}, language = {{eng}}, note = {{Student Paper}}, title = {{The Cost of Non-Integration: Evidence from Nigeria Opting Out of an Economic Partnership Agreement with the EU}}, year = {{2022}}, }