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How Vulnerable is Sub-Saharan Africa to Geoeconomic Fragmentation?

Marijn Bolhuis, Hamza Mighri, Henry Rawlings, Ivanova Reyes and Qianqian Zhang

No 2024/083, IMF Working Papers from International Monetary Fund

Abstract: This paper studies the potential effects of geoeconomic fragmentation (GEF) in the sub-Saharan Africa region (SSA) through quantifying potential long-term economic costs. The paper considers two alternative GEF scenarios in which trade relations are fully or partially curtailed across world economies. Our quantification relies on a multi-country multi-sector general equilibrium model and takes a deep dive into the impact across SSA’s oil-rich, other resource-rich and non-resource-rich countries. The results are based on a detailed dataset including information for 136 tradable primary commodity and 24 manufacturing and services sectors in 145 countries—32 of which are in SSA. We find that under GEF, SSA could experience long-term wellfare losses of approximately 4 percent of GDP, twice the losses of the rest of the world. This strong effect results from the large losses of other resource-rich and non-resource rich countries in SSA, given their high dependence on commodity trade. However, if the world experiences a less severe GEF-induced trade disruption—a strategic decoupling—SSA countries could derive minor gains from the re-shuffling of global market supply, specially in energy products.

Keywords: Sub-Saharan Africa; geoeconomic fragmentation; trade; costs; global integration; commodities; trade diversion; SSA goods Trade; trade disruption; sub-Saharan Africa region; SSA Trade; trade assumption; Exports; Trade balance; Oil exports; Trade barriers; Trade agreements; Global (search for similar items in EconPapers)
Pages: 27
Date: 2024-04-05
New Economics Papers: this item is included in nep-afr and nep-int
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Citations: View citations in EconPapers (1)

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