Is Agricultural Production Spillover the Rationale behind CAADP Framework? Spatial Panel Model Approach

The creation of a union is often rationalized on grounds of moving the equilibrium toward the first best solution whenever independent policies generate spillovers. This arises as a common agenda can significantly reduce the scope of free-riding behavior among member countries. In addition, cross-border externalities arising out of higher levels of market integration entails countries to agree on policy coordination. The present study explores the extent and magnitude of agricultural production spillover that might validate the adoption of a common agriculture agenda among African countries. Overall, our results suggest the presence of positive and significant agricultural production spillover. No evidence of beggar-thy-neighbor or negative spillover policies was found; on average, each country received 2.5 percent growth as a result of spillover. Our results also suggest that convergence dynamics is much stronger when spillover is accounted for, which provides a rationale for a common agenda such as CAADP.