A GENERAL EQUILIBRIUM ANALYSIS OF THE POTENTIAL EFFECTS OF THE AFRICAN CONTINENTAL FREE TRADE AREA ON THE MALAWI ECONOMY

Adwell Zembele

No 333393, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: Malawi has been pursuing regional integration at the bilateral, regional and multilateral level for the past four decades. Currently, Malawi is participating in negotiating the African Continental Free Trade Area (AfCFTA). Regional integration has always generated debate among stakeholders as regards its impact on the economy. While some advocate for regional integration arrangements, others are worried that trade openness will bring competition and harm the economy. The current study, therefore, investigated the potential economy-wide effects of AfCFTA on Malawi’s gross domestic product (GDP), trade, industry output, demand for labour, and economic welfare of the population. The study employed the Global Trade Analysis Project (GTAP) model with the GTAP 10 database, the Malawi Revenue Authority (MRA) 2014 tariff book tariff levels, and Malawi tariff offer under AfCFTA for counter-factual simulations. Findings show that AfCFTA will have mixed short-term effects on Malawi. Simulation results indicate that the AfCFTA will increase the gross domestic product (GDP) and welfare on the Malawi population. For example, the 2034 liberalisation scenario shows that GDP may change by 0.71 percent while welfare may increase to USD162.61 million. The impact on trade (imports and exports) is minimal while the effect on industry output and demand for labour is mixed. These findings may be useful in informing the formulation of policies and negotiation positions since negotiations for the AfCFTA are still ongoing.

Keywords: International Relations/Trade; International Relations/Trade (search for similar items in EconPapers)
Pages: 24
Date: 2022
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (1)

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