Africa’s Trade with China and US: Has COVID-19 Changed the Trends of Trade?

Authors

  • Adesola Ibironke Department of Economics, Adekunle Ajasin University, Akungba-Akoko, Ondo State, Nigeria

DOI:

https://doi.org/10.52223/jei3022101

Keywords:

International economics, International trade, COVID-19

Abstract

Africa’s trade with China and the US is one of the international issues affecting development in the continent. This paper, therefore, examines the effects of COVID-19 on Africa’s trade with the two countries by investigating whether the pandemic has changed the trends of the trade. The article explores the responses of the individual trade of China and the US with Africa to their own shocks, without and with the pandemic, using the vector autoregressive (VAR) model and monthly data covering 1970m01 (January 1970) to 2020m07 (July 2020). The results show that China’s trade performs better while responding to a shock to America’s trade than America’s trade does while responding to a shock to China’s trade, without and with COVID-19. This finding suggests that China has a stronger trade footing in Africa and that COVID-19 had not changed the trends of Africa’s trade with China and America, even with the impact of the pandemic on China. China’s dominant trade status in Africa is probably due to the country’s large investment and aid in the continent. The key policy focus of Africa on trading with China and the US should therefore be how to achieve optimum trilateral trade thresholds in the face of potential trade-offs.

Downloads

Download data is not yet available.

References

Abberger, K., Nierhaus, W., 2008. How to define a recession? ETH Zurich and Ifo Institute for Economic Research, 9(4), 74-76.

Alimi, R.S., 2012. Is the Export-led growth hypothesis valid for Nigeria? Research Journal of Economics and Business Studies, 2(2), 8-14.

Baxter, M., Kouparitsas, M.A., 2005. Determinants of business cycle comovement: A robust analysis. Journal of Monetary Economics, 52(1), 113-157.

Baur, D.G., 2012. Financial contagion and the real economy. Journal of Banking and Finance, 36(10), 2680-2692.

Deb, P., Furceri, D., Ostry, J., Tawk, N., 2020. The effect of containment measures on the COVID-19 pandemic, IMF Working Paper, WP/20/159.

De Waal, A., 2014. The impact of global economic shocks on South Africa amid time-varying trade linkages (Doctoral Thesis, University of Pretoria, South Africa). Available at https://repository.up.ac.za.

Dornbusch, R., 1976. Expectations and exchange rate dynamics. Journal of Political Economy, 84, 1161-1176.

Dornbusch, R., Park, Y., Claessens, S., 2000. Contagion: Understanding how it spreads, The World Bank Research Observer, 15(2), 177–97.

Eviews, 2017. Eviews 10 Users Guide II. Irvine: IHS Global Inc.

Fleming, J.M., 1962. Domestic financial policies under fixed and under floating exchange rates. International Monetary Fund Staff Papers, No. 9, 369-379.

Guesmi, K., Kaabia, O., Kazi, I., 2013. Does shift contagion exist between OECD stock markets during the financial crisis?’ The Journal of Applied Business Research, 29(2), 469-484.

Ihrig, J., Weinbach, G., Wolla, S., 2020. COVID-19’s effects on the economy and the fed’s response. PAGE ONE Economics,10.https://research.stlouisfed.org/publications/page1-econ/2020/08/10/covid-19s-effects-on-the-economy-and-the-feds-response.

Jo, S., 2012. The effects of oil price uncertainty on the macroeconomy. Bank of Canada Working Paper, No. 40.

Kohnert, D., 2018. Trump's tariff's impact on Africa and the ambiguous role of African agency. Review of African Political Economy, 45(157). https://nbn-resolving.org/urn:nbn:de:0168-ssoar-58089-9.

Kose, M.A., Riezman, R., 2001. Trade shocks and macroeconomic fluctuations in Africa. Journal of Development Economics, 65(1):55–80. http://www.sciencedirect.com/science/article/pii/S0304-3878(01)00127-4.

Liu, H., Manzoor, A., Wang, C. Zhang, L., Manzoor, Z., 2020. The COVID-19 outbreak and affected countries’ stock markets response. International Journal of Environmental Research and public Health, 17, 1-19.

Mendoza, E.G., 1995. The terms of trade, the real exchange rate, and economic fluctuations. International Economic Review, 36, 101–137.

Mundell, R.A., 1963. Capital mobility and stabilization policy under fixed and flexible exchange rates. Canadian Journal of Economics and Political Science, 29, 475-485.

Schneidman, W., Westbury, A., 2013. The commercial relationship between the United States, China and African Countries: Areas for Trilateral Cooperation. Brookings Institution Conference Paper.

Shimokawa, S., Kyle, S., 2003. Transmission of shocks through international lending of commercial banks to LDCs. Cornell University, Working Paper, No 27.

Stock, J.H., Watson, M.W., 2001. Vector autoregressions. Journal of economic perspectives, 15(4), 101-115.

Wenping, H., 2013. New Actors in International Development: The Case of China in Africa. Conference paper on a trilateral dialogue on the United States, Africa and China.

World Bank, 1993. The East Asian miracle: Economic growth and public policy. New York: Oxford University Press.

World Bank, 2020. Global economic prospects. Washington DC: World Bank Group.

Yang, J., 2008. An analysis of so-called export-led growth. IMF Working Paper, WP/08/220.

Downloads

Published

2021-07-26

How to Cite

Ibironke, A. (2021) “Africa’s Trade with China and US: Has COVID-19 Changed the Trends of Trade?”, Journal of Economic Impact, 3(2), pp. 55–66. doi: 10.52223/jei3022101.
Bookmark and Share