Potential Impacts of the African Continental Free Trade Area (AfCFTA) on Selected Countries: Case of Cote d’Ivoire, Egypt, Guinea, Mozambique, Tunisia and Uganda

Kenan Bagci, Abdouramane Diallo and Anise Terai

No 333469, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: This study investigates the potential impacts of the African Continental Free Trade Agreement (AfCFTA) on production and trade in six selected African countries, namely Côte d’Ivoire, Egypt, Guinea, Mozambique, Tunisia and Uganda. In order to estimate the potential long-term effects of the agreement on these countries, the study uses the computable general equilibrium model developed by the Global Trade Analysis Project (GTAP) considering two alternative scenarios, full tariff elimination and partial liberalization. The total GDP of the six countries are expected to be affected at different rates. In terms of welfare impacts, Côte d’Ivoire is estimated to see the largest benefits from trade liberalization, followed by Egypt and Guinea. Mozambique may experience a negative welfare effect. At the sectoral level, the most significant transformation is expected in Guinea and Côte d’Ivoire after full trade liberalization. Overall, countries with a higher initial level of protection (Guinea and Côte d’Ivoire) tend to see a higher benefit from being part of a regional trade agreement due to the elimination of high barriers. Countries with more liberal trade regimes and greater openness tend to experience relatively lower welfare benefits resulting from the further liberalization of trade. Gains would be higher if supplemented with additional trade reforms, where trade facilitation and capital mobility would significantly boost the gains. However, structural adjustment costs and associated social tensions may be higher in countries with greater ex-ante protectionism.

Keywords: International Relations/Trade; Labor and Human Capital (search for similar items in EconPapers)
Pages: 25
Date: 2022
New Economics Papers: this item is included in nep-ara, nep-des and nep-int
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