Revenue Implications of Continental Free Trade Area: A Short‐run Perspective of Malawi

Masiya, Michael

doi:10.1111/1467-8268.12408

Cited by 11 publications

(15 citation statements)

References 10 publications

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“…In both scenarios, the socio-economic gains outweigh the loss of tariff revenue for the whole of Africa. This is in line with the results of the study of Masiya (2019) in Malawi.…”

supporting

confidence: 92%

Potentials of the African Continental Free Trade Area: A combined partial and general equilibrium modeling assessment for Central Africa

Ekobena

Coulibaly

Kéita

et al. 2021

African Development Review

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This study evaluates the potential impacts of the implementation of the African Continental Free Trade Area's (AfCFTA) tariff modalities on tax revenues, industrial production, trade flows, welfare and consumption for seven central African countries. Drawing on data from member states and the Global Trade Analysis Project (GTAP) database, two methodologies are applied in the study. Computable general equilibrium (CGE) and partial equilibrium (PE) are used to evaluate the long-and short-term effects respectively. The results show that the reduction in tariff barriers provided by the AfCFTA will lead to a decrease in tariff revenue in some Central African countries in the short term. However, in the long term, these losses remain largely offset by the socio-economic benefit issues generated by the implementation of the agreement, particularly in terms of economic growth and the well-being of the region's population. To cub these revenue deficits, this paper encourages Central African countries to ratify and implement the AfCFTA. Also, they should diligently adopt all necessary reforms that could help reap the potential long-term gains. | INTRODUCTIONOn 21 March 2018 the legal act creating the African Continental Free Trade Area (AfCFTA) which has become a priority for the continent's union was signed in Kigali, Rwanda by African countries.

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“…In both scenarios, the socio-economic gains outweigh the loss of tariff revenue for the whole of Africa. This is in line with the results of the study of Masiya (2019) in Malawi.…”

supporting

confidence: 92%

Potentials of the African Continental Free Trade Area: A combined partial and general equilibrium modeling assessment for Central Africa

Ekobena

Coulibaly

Kéita

et al. 2021

African Development Review

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“…Thus, for most part, while evidence abounds on the sub-regional trade agreements spurring trade, empirical studies on the trade effects of a continental-wide trade agreement, such as AfCTFA, is dearth although few studies are notable. For instance, Masiya (2019) examines the short-run revenue implications of AfCFTA for Malawi and finds that, while the country stands to benefit from ratifying the AfCFTA agreement through improved trade creation, the country will undoubtedly lose tax revenue with more marked effects stemming from the elimination of tariffs on capital goods. More recently, Abrego et al (2019) estimate the welfare effects of the AfCFTA for 45 countries in Africa and find significant potential welfare gains from trade liberalization.…”

Section: Introductionmentioning

confidence: 99%

Potential trade, welfare and revenue implications of the African Continental Free Trade Area (AfCFTA) for Ghana: An application of partial equilibrium model

Bayale

Ibrahim

Atta-Mensah

2020

Journal of Public Affairs

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This study estimates the potential implications of the implementation of African Continental Free Trade Area (AfCFTA) Agreement for Ghana in terms of trade, welfare and revenue effects. By applying the WITS-SMART simulation model on 2018 disaggregated international trade data, the paper finds that total trade effects in Ghana are likely to surge by US$ 148.3 million while promoting consumers' welfare by US$ 8.597 million. However, revenue losses are imminent as the country might experience a drop in tariff revenue of US$ 8.604 million. Overall, the free trade area is expected to improve on the country's trade balance as exports are envisaged to outweigh imports. In order to mitigate the revenue losses, the paper recommends that the country keep substantial portion of tariff lines for sensitive and excluded products over a longer period during the liberalization.

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“…The findings show that total tax revenue as a share of GDP declined because of the inability of Tanzania to strengthen the domestic taxes as a means of recovering from customs revenue loss due to liberalization. This result is also shared by Masiya (2019) in analyzing the potential revenue implications of AfCFTA in Malawi using SMART model. Masiya (2019) has observed that Malawi is likely to benefit from joining the AfCFTA through trade creation.…”

Section: Literature Reviewmentioning

confidence: 53%

“…This result is also shared by Masiya (2019) in analyzing the potential revenue implications of AfCFTA in Malawi using SMART model. Masiya (2019) has observed that Malawi is likely to benefit from joining the AfCFTA through trade creation. However, revenue losses are imminent and more pronounced for capital goods.…”

Section: Literature Reviewmentioning

confidence: 53%

“…In similar way, the lower tariffs due to liberalization may lead to a reduction in tariff evasion by lowering the marginal benefit to avoid taxation thereby encouraging more importers to declare their imports. Hence, an increase in import tax revenues is expected (Bayale, et al, 2020b; Epaphra, 2014; Masiya, 2019; Matlanyane & Harmse, 2002). However, when evoking the United States of America trade agreements with two small nations, Israel and Singapore, Rodrik (2018) found that the trade agreements' reasons go beyond economic interests.…”

Section: Literature Reviewmentioning

confidence: 99%

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Assessing the potential effects of the AfCFTA on togolese economy: An application of partial equilibrium model

Wonyra

Bayale

2020

Journal of Public Affairs

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Togo is one of the African countries to join spontaneously the African Continental Free Trade Area (AfCFTA), a new benchmark for trade development which seeks to provide a framework for the liberalization of trade in goods and services in Africa. Several economic opportunities are expected in Togo as a result of the implementation of the AfCFTA. This article provides insights on the potential implications of the AfCFTA Agreement for Togo in terms of trade, revenue and welfare effects. By applying the WITS‐SMART simulation model on 2018 disaggregated trade data, we find that, trade effects in Togo are likely to surge by US$ 8.83 million while promoting consumers' welfare by US$ 1.09 million. However, revenue losses are imminent as the country might experience a drop in tariff revenue of US$ 4.66 million. Overall, the AfCFTA is expected to improve on the country's trade balance as exports are envisaged to outweigh imports. In order to mitigate the revenue loses, we recommend that the country keeps substantial portion of tariff lines for sensitive and excluded products over a longer period during the liberalization.

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Revenue Implications of Continental Free Trade Area: A Short‐run Perspective of Malawi

Cited by 11 publications

References 10 publications

Potentials of the African Continental Free Trade Area: A combined partial and general equilibrium modeling assessment for Central Africa

Potentials of the African Continental Free Trade Area: A combined partial and general equilibrium modeling assessment for Central Africa

Potential trade, welfare and revenue implications of the African Continental Free Trade Area (AfCFTA) for Ghana: An application of partial equilibrium model

Assessing the potential effects of the AfCFTA on togolese economy: An application of partial equilibrium model

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