Assessing the price-raising effect of non-tariff measures in Africa

In spite of widespread tariff reductions, intra-African borders remain “thick”. Regional trade is inhibited by inadequate transportation infrastructure, but also by various non-tariff measures. This paper combines price data from the World Bank’s International Comparison Project (ICP) with a new database on non-tariff measures (NTMs) to estimate their effect on consumer prices for selected consumption products. Results based on panel regressions on 1260 country-product pairs suggest that, after controlling for tariffs, systematic cross-country cost-of-living differences, and product-specific unobservables, sanitary and phytosanitary (SPS) measures contribute to raise the price of African foodstuffs by 14%. At the product level, rice and other cereals, some types of meat (e.g. poultry), and edible oils tend to fetch high ad-valorem equivalents. Combining our estimates with data on household expenditure patterns from Kenya’s household survey, we show that the effect is regressive, raising the cost of living by 9% for poor households.

Cadot, O. and J. Gourdon, (2014) "Assessing the Price Raising Impact of Non-Tariff Measures in Africa", Journal of African Economies, vol. 24(4), pp. 425-463