Abstract:
This study investigates the determinants of regional value chains (RVCs) in African countries using gravity model analysis. This approach allows for bilateral characteristics of the gravity model and gives room for introducing policy variables in the augmented version. To that effect, RVCs were modelled as a dependent variable in our estimation, and apart from the gravity variables, relevant policy and non-policy variables based on guidance from the literature were introduced to provide policy directions to government and non-government actors in policy space towards efforts to promote RVCs participation on the continent. The results from our model have demonstrated the importance of gravity variables such as distance and colonial experience as crucial factors for RVC participation. However, the place of policy variables such as tariffs, industrialisation, accession to regional trade agreements and strategic FDI inflows cannot be overemphasised.