Assessing the Intra-SADC Trade in Goods and Services

Abstract

This study investigated the extent of trade within SADC member states and identified factors affecting intra-regional trade in the region. The study used the relative measure of trade intensity to measure the exports and imports shares within member states and gravity model to identify factors affecting intra-SADC trade flows. The results from relative measure of trade intensity indicated that although the intra-SADC trade remains low, but figures appear to increase compared to the previous recorded facts. The analysis indicates that the share of intra-SADC exports averaged to 31.3 percent between 2008 and 2012. More specifically, Swaziland and Zimbabwe have the highest share of their total exports, while Seychelles has the smallest share of exports to SADC member states. Meanwhile, the share of intra-SADC imports averaged to 35.0 percent between 2008 and 2012 from which Lesotho and Zimbabwe had the largest share of their total imports, while South Africa has the smallest share within the region.It was found that South Africa has a comparative advantage in trade, receiving the largest share of exports and imports from other member states within the region. Generally, findings indicated that most SADC member states appear to trade more with other countries outside the SADC region. Findings from the gravity model indicates that other factors remaining constant, trade flows within SADC region significantly depend on GDP, per capita income, the value of manufacturing, foreign direct investment, financial development, infrastructure development, stable exchange rate, and low inflation rate. These variables were found to be important factors to the intra-regional trade flows in most SADC member states.  It is recommended that, SADC countries need to adopt export diversification through identifying priority products, in which each country has a comparative advantage within the SADC member states.