# **Introduction**

Economic integration of the African continent rests on two pillars: large investments in transportation infrastructure and the ratification of an ambitious pan-African trade agreement. Both aim at reducing barriers to trade, but in different ways. Better transport infrastructure reduce transport costs between African countries and between them and the rest of the world, and trade facilitation programs reduce queuing times at borders. Preferential trade agreements (PTA) reduce frictions directly between trading partners by reducing tariffs and harmonizing policies on e-commerce, investment, and intellectual property. Infrastructure improvements and trade reforms are therefore potentially complementary: reducing trade frictions alone may not be sufficient if the contracting parties are poorly connected; similarly, improving infrastructure connectivity alone may not be sufficient in the presence of trade barriers (tariff and non-tariff). The contribution of this paper is to address the question of how the effects of both pillars of integration operate in combination using granular data on transport infrastructure, information on the depth of regional trade agreements and general equilibrium trade modeling.

To quantify the joint impact of trade reforms and infrastructure investment in Africa, we first build a new citylevel database of travel times using a geographic information system (GIS). We map the current infrastructure and border delays for the entire continent (both within Africa and between Africa and the rest of the world). We then add the infrastructure projects as listed in the Program for Infrastructure Development in Africa (PIDA) and assess their impacts on reducing transportation times. For trade policy, we rely on data from the World Bank’s Deep Trade Agreements database (Mattoo, Rocha & Ruta 2020); which contains detailed information on the content of trade agreements on a range of topics, including competition policy, investment, capital movements, and intellectual property rights protection. We follow the cluster analysis on the distribution of provisions done by Fontagn ́e, Rocha, Ruta & Santoni (2023) to sort the agreements according to their ambition into Shallow, Medium, and Deep treaties. We use both datasets to quantify the combined trade and welfare impacts of the infrastructure investments as planned in the PIDA and an ambitious (i.e., Deep) trade agreement for the African continent.

We quantify the impacts in four steps. First, we estimate a structural gravity model (Anderson & van Wincoop 2003) in which we include the level of ambition in trade agreements to explain bilateral trade flows. We include both domestic and international trade flows, as well as the trade deflection effect due to border crossings (an inverse measure of deepening globalization).

Second, we give a functional form to the unobserved bilateral component that depends on transportation time, contiguity, language proximity, past colonial relations, and other unobservable country characteristics for the year 2018. This strategy allows us to determine the elasticity of domestic and international sales to transportation time.

Third, after verifying that the elasticity resulting from our data is consistent with estimates widely used in the literature (Hummels 2007, Hummels & Schaur 2013), we quantify the effect of planned infrastructure investments on transportation.

As a fourth and final step, we construct counterfactuals for trade policy and the transportation network. For infrastructure, we construct two alternative transportation networks based on the projected investments for 2