Trade, Growth, and Welfare Impacts of the CFTA in Africa

NICOLÁS DEPETRIS CHAUVIN; GUIDO PORTO; MARIA PRISCILA RAMOS

Viena

Conferencia; 10th FIW-Research Conference "International Economics"; 2017

the FIW Project , the Leibnitz Institute for East and Southeast European Studies (IOS) Regensburg, the ifo institute, the University of Ljubljana, the Universita di Bologna, University of Economics Bratislava and the Hungarian Academy of Sciences (MTA KRT

This paper provides a comprehensive and cohesive analysis of the likely economic effects ofa 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 modeland microsimulations using households surveys, we highlights the role of complementarypolicies in this process of integration. Four incremental liberalisation scenarios have beenrun 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 theCFTA improves trade, growth and welfare gains for each African country, but with unevenimpacts and asymmetric change in trade patterns among countries and within sectors, whichare sensitive the the modalities of the CFTA implementation. We also find that the CFTAwould lead to asymmetric changes in trade patterns among African countries and withincountries across sectors. Finally, we find that the short-run impacts of CFTA are generallyvery small while the long-run impacts are instead positive. However, there is heterogeneityin the welfare effects in a given country and across countries.