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Journal of Public Administration (JOPA)

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Welfare Effects of the AfCFTA on the Least Developed Countries in Africa: A Computable General Equilibrium Analysis

Author: Milena D Störmer and Pumela Msweli

Affiliation: 1Friedrich-Alexander University Erlangen-Nürnberg 2Graduate School of Business Leadership, University of South Africa

Source: Journal of Public Administration, 2024-03-07 11:15:21

Accreditation: Department of Higher Education and Training (DHET)



Abstract: Welfare Effects of the AfCFTA on the Least Developed Countries in Africa: A Computable General Equilibrium Analysis

The objective of the study described in this paper is to evaluate the assertion that the Africa Continental Free Trade Agreement (AfCFTA) is expected to increase economic welfare among its member countries. The paper leverages the cross-sectional variation between least developed countries (LDCs) and non-LDCs to analyse output, trade, and welfare effects of the AfCFTA. The analysis employs a sectoral aggregation geared to detect the most salient features of the manufacturing industries in LDCs. LDCs in Africa face significant structural challenges to long-term development and are susceptible to economic shocks. Even though the World Bank and African Union have taken significant steps in addressing the main LDC challenges, it has not stopped LDC governments from being highly concerned about the rising adjustment costs that the AFCFTA agreement entails. Using data from the Version 10, Global Trade Analysis Project (GTAP) Data Base as w