Trade,Growth and Welfare IMpacts of the CFTA in Africa

NICOLÁS DEPETRIS CHAUVIN; GUIDO PORTO; MARIA PRISCILA RAMOS

Oxford

Conferencia; Center for the Study of African Economies (CSAE) Conference 2017: Economic Development in Africa; 2017

CSAE

This paper provides a comprehensive and cohesive analysis of the likely economic effects of a Continental Free Trade Agreement (CFTA), with a particular focus on six SSA countries. Using a two-step approach that combines counter-factual simulations with a CGE model and microsimulations using households surveys, we highlights the role of complementary policies in this process of integration. Four incremental liberalisation scenarios have been run to isolate the effects of the tariff elimination on agricultural and on manufactured goods, the reduction in NTMs, and in transaction costs associated with time. We find that the CFTA improves trade, growth and welfare gains for each African country, but with uneven impacts and asymmetric change in trade patterns among countries and within sectors, which are sensitive the the modalities of the CFTA implementation. We also find that the CFTA would lead to asymmetric changes in trade patterns among African countries and within countries across sectors. Finally, we find that the short-run impacts of CFTA are generally very small while the long-run impacts are instead positive. However, there is heterogeneity in the welfare effects in a given country and across countries.