International Demand Spillovers in South-South Exports: Application to Sub-Saharan Africa and Developing Asia

International Demand Spillovers in South-South Exports: Application to Sub-Saharan Africa and Developing Asia

This paper aims at analyzing how export performance of developing countries differs across destinations. With application to Sub-Saharan Africa and Asia, we first employ a gravity equation to break down each region`s export performance, separating the contribution of foreign market access from internal supply capacity. Then, we identify the key determinants of countries` export performance, both theoretically and empirically. Our contribution is to introduce demand spillovers that help market access to improve supply conditions. Regression reveals a positive interaction between the two components, with a higher elasticity of exports with respect to market access in the particular case of South-South trade flows.