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The African Continental Free Trade Agreement: Welfare Gains Estimates from a General Equilibrium Model
Author:
Mr. Lisandro Abregonull

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Maria Alejandra Amadonull

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Tunc Gursoynull

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Garth P. Nichollsnull

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Hector Perez-Saiznull

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https://orcid.org/0000-0001-6376-636X
Series:
IMF Working Papers
Volume/Issue:
Volume 2019: Issue 124
Language:
English
Publication Date:
07 Jun 2019
DOI:
https://doi.org/10.5089/9781498314398.001
ISBN:
9781498314398
ISSN:
1018-5941
Pages:
32
Keywords:
WP; perfect competition; utility function; AfCFTA; welfare; general equilibrium; trade barriers; AfCFTA trade liberalization agenda; trade elasticity; iceberg trade costs; equilibrium trade model; trade openness; Tariffs; Imports; Trade balance; Income; Africa; Southern Africa; Global; Asia and Pacific
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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In March 2018, representatives of member countries of the African Union signed the African Continental Free Trade Area (AfCFTA) agreement. This agreement provides a framework for trade liberalization in goods and services and is expected to eventually cover all African countries. Using a multi-country, multi-sector general equilibrium model based on Costinot and Rodriguez-Clare (2014), we estimate the welfare effects of the AfCFTA for 45 countries in Africa. Three different model specifications—comprising both perfect competition and monopolistic competition—are used. Simulations include full elimination of import tariffs and partial but substantial reduction in non-tariff barriers (NTBs). Results reveal significant potential welfare gains from trade liberalization in Africa. As intra-regional import tariffs in the continent are already low, the bulk of these gains come from lowering NTBs. Overall gains for the continent are broadly similar under the three model specifications used, with considerable variation of potential welfare gains across countries in all model structures.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2019: Issue 124