The African Free Trade Area and its Impact on the Volume of Intra-Regional Trade in light of Trade Openness to African Markets

Abstract

This study aims to use the gravity model to analyze the trade exchange between Africa and Algeria, and the potential role that African Free Trade Area countries could play in upgrading Algeria's exports and increasing its opportunities to penetrate African markets and fully open up to the continent. The study period spans from 2010 to 2022, encompassing 51 countries. Algeria's participation in the African Free Trade Area represents a significant opportunity to increase its intra-regional trade and openness to African markets, granting access to a market of over 1.3 billion people and a GDP exceeding 3 trillion dollars. Through our study, we provide an overview of the economic and trade performance of the African continent and the African Free Trade Area, as well as the efforts of the state to penetrate these markets. We also analyze Algeria's trade exchanges with countries in the region. Additionally, we delve into the gravity model, both theoretically and practically, to elucidate the impact of study variables on trade flows between Algeria and the region. The study concludes that there is a positive impact of variables such as the GDP of regional countries, trade agreements, population, and maritime accessibility on trade flows. However, there is a negative impact of Algeria's GDP and distance on intra-regional trade between Algeria and other African countries.