EU Product Standards and Export Diversification in Nigeria and South Africa

Abstract

The issue of export diversification has been receiving attention among scholars and policymakers. However, African countries face critical challenges in improving domestic capacity to meet production and quality standards required in the foreign markets.Premised on this, this study explores how standards affect agriculture and textile products exported to the EU market, by the two biggest economies in SSA between 1995 and 2004. Employing the Hirschman concentration index as a measure of diversification in the context of a modified poisson model of gravity trade theory, findings show that standards and harmonized standards are of no significant effect on South African agricultural export diversification while in Nigeria, standards have significant effect on agricultural export diversification but have no effect on textiles. Moreover, harmonized standards show positive effect on agricultural export concentration but have no effect on textile exports in South Africa. However, harmonized standards plays no role in the diversification of Nigerian agricultural and textile export varieties. The study therefore recommends that producers of agricultural products in South Africa should focus on single, country specific standards while producers of agricultural products in Nigeria should adopt harmonized standards to promote bilateral trade and develop quality products to improve competition in the EU markets.