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GTAP Resource #5267

"A GTAP Model Analysis of the Impact of Alternative Regional Trade Arrangements on the Ethiopian Economy"
by Shiferaw, Habtamu and Taiji Hagiwara


The Common Market for Eastern and Southern Africa (COMESA) is a Free Trade Area (FTA) regional trade agreement in Africa. Currently, Ethiopia is negotiating to join COMESA FTA. This study assesses the impact of three regional trade arrangements, COMESA FTA, customs unions, and the European Partnership Agreement (EPA) on the economy of Ethiopia. The analysis is based on a static Global Trade Analysis Project (GTAP) model, version 9 database. Unlike previous studies, the customs union scenarios are designed at the detailed Harmonized System (HS) level. The results indicate that most COMESA regions win in terms of GDP and welfare, with full FTA among all COMESA regions while for customs unions and the EPA, the results are mixed. Customs unions result in large welfare losses for some countries due to an increase in protection. The world as a whole enjoys welfare gains thanks to the COMESA, FTA and EPA experiment, but world GDP declined slightly. Rwanda, Zambia, and Rest of South Central Africa (RSCA) emerge as the biggest winners in terms of welfare in all experiments. For Ethiopia, the aggregate trade balance improves more from the customs unions and the EPA than from FTA, but there is large revenue loss. Further, COMESA, customs unions and the EPA result in net welfare losses for Ethiopia, while COMESA and FTA improve welfare. Therefore, there is no strong reason for Ethiopia to move to the customs union and the EPA in the short run, but it is recommended for Ethiopia to join COMESA FTA.

Resource Details (Export Citation) GTAP Keywords
Category: 2017 Conference Paper
Status: Published
By/In: Presented at the 20th Annual Conference on Global Economic Analysis, West Lafayette, IN, USA
Date: 2017
Created: Shiferaw, H. (4/13/2017)
Updated: Shiferaw, H. (11/1/2018)
Visits: 1,944
- Economic growth
- Multilateral trade negotiations
- Preferential trading arrangements
- Africa (East)
- Africa (Southern)
- European Union

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