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and 2014–16); (b) “improved” (countries with average annual 1995–2008 GDP growth below the top tercile but 2014–16 growth greater than the top tercile); (c) “slipping” (countries with average annual 1995–2008 GDP growth exceeding the bottom tercile but 2014–16 growth below the bottom tercile); and (d) “stuck in the middle” (countries with 2014–16 average annual GDP growth exceeding the bottom tercile but lower than the top tercile in both periods). 2. The Cotonou Agreement is a treaty between the EU and the African,

Caribbean and Pacific Group of States (ACP), under which a new scheme called the Economic Partnership Agreements (EPAs) took effect in 2008. This EPA provides reciprocal trade agreements whereby the EU provides duty-free access to its markets for ACP exports, and the ACP countries provide duty-free access to their own markets for

EU exports. 3. We did not include the entire universe of trading partners because of the computational limits given the estimation method used. 4. BACI is the French acronym of “Base pour l’Analyse du Commerce

International.” 5. A critical issue is endogeneity. AGOA and EBA coverage (product and country eligibility) is endogenous, given reliance on economic or governance performance that can be affected by trade. We tried instrumenting for this with the United Nations Development

Programme’s Human Development Index and the World Bank’s

Worldwide Governance Indicators on corruption, but we could not reach any conclusion because of the multicollinearity of these instruments with many of the independent variables. 6. We cannot estimate the EBA’s effect in the panel specification of equation (3.1) because of multicollinearity between the EBA variable and the fixed effects included in the panel estimation. 7. The G-20 Compact with Africa was launched in 2017 to promote private investment in Africa, including in infrastructure. Its primary objective is to increase attractiveness of private investment through substantial improvements in the macro, business, and financing frameworks (“About the Compact with Africa,” G-20 Compact with

Africa website: https://www.compactwithafrica.org/content/compact withafrica/home.html). 8. Martin, Mayer, and Thoenig (2008) show that countries with a lot of economic interaction with their neighbors are less likely to engage in an armed conflict.

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World Bank.

PART II New Market Frontiers: Focus on East Asia

Asia, particularly East Asia and South Asia, has been the engine of global growth in the past few decades. The growing middle class and increasing demand from East Asia, accompanied by rising relative wages along with the shifting structure of global value chains (GVCs), may offer new economic opportunities for Sub-Saharan Africa. Although the region’s exports to Asia remain highly concentrated in resource-intensive products such as petroleum, minerals, metals, and other primary goods, a few African countries are diversifying their export portfolios following the export boom to Asia.

Part II (chapters 4 and 5) provides important insights about Africa–Asia trade. For example, although China is the continent’s key trading partner, it is not always the dominant trading partner for individual Sub-Saharan African countries. For example, since 2005, India has become the largest export destination for Ghana, Nigeria, and Tanzania. Pakistan has been the top destination for Kenya’s exports. The two chapters in this part of the book present a detailed analysis of the extent of trade between the two regions, the subsequent GVC links, and prospects for the future.

To tap this rising potential, Sub-Saharan African policy makers must further deepen their trade ties with Asia. Building on the achievements of recent periods, countries should strengthen their positions in this “hub-and-spoke” pattern of trade. A careful assessment of the changing demand patterns of Asia’s growing middle class could inform export diversification options for Sub-Saharan African countries. Countries that invest in reforming their institutions—including strengthening the rule of law and

contract enforcement mechanisms, reducing rent-seeking activities in specific markets, and reducing risks of political instability—would see increasing trade with Asia and the benefits from such trade.

A policy of export orientation toward Asia could support faster growth and economic transformation and poverty reduction. The prospects for gains in structural transformation will be enhanced by the ongoing restructuring of economies in East Asia, mainly China, and by committed leadership for reform and the building of firm and state capabilities in African countries. Heterogeneities in the extent of gains from these changes are evidence that improving external prospects and dormant comparative advantages alone will not guarantee gains. These efforts must be accompanied by industrial, trade, and competition policies to take advantage of the opportunities.