Is Human Rights Protection Good for Trade in Africa: Evidence from Proximity to Democratically ‘Good’ and ‘Bad’ Neighbouring Countries

Abstract

We study whether institutions supportive of human rights improve trade
openness. Strengthening human rights institutions could reduce the adverse
consequence of trade on consumers and labour rights. On the other
hand, adherence could impose high transaction costs limiting the comparative
advantage of many African countries. We study the effect of democratic
and human rights institutions on trade openness for 40 African
countries from 1960 to 2010. To address endogeneity concerns, we exploit
the variation in democracy measurement among geographically proximate
neighbours with similar political histories (i.e. an inverse distanceweighted
average of democracy among ‘neighbours’).We find that human
rights and democratic institutions increase trade in Africa. We find evidence
supporting property rights, freedomof domestic movement and the
political recruitment process as likely mechanisms.