The welfare effects of economic integration in the tripartite free trade area

Pasara, Michael Takudzwa; Dunga, Steven Henry

doi:10.31920/1750-4562/2019/v14n1a3

Cited by 8 publications

(13 citation statements)

References 164 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…The simulation model is able to separate trade creation and diversion effects. Viner (1950) as quoted in Pasara and Dunga (2019) postulated that the formulation of FTAs implies changes in tariffs, which in turn changes the price of imports to an extent that less efficient products developed by domestic industries are replaced by imports from efficient FTAs members [10,16]. Thus, trade creation is welfare enhancing since there is a positive consumption effect due to price decreases.…”

Section: Methodsmentioning

confidence: 99%

“…Consequently, Africa's intra trade statistics lag behind compared to other continents and economic regions. The level of intra-trade in the Asia-Pacific Economic Cooperation is approximately around 67%; by comparison, the European Union has an intra-trade figure of around 61% but Africa only has a meagre 12% intra-trade figure [10]. More specifically, the COMESA intra-trade levels range between 5% and 10%, the EAC is around 20%, while that of the SADC oscillates between 11% and 15% [13].…”

Section: Trade Overviewmentioning

confidence: 96%

“…Across the 26 TFTA countries, Makochekanwa (2012) highlighted that agricultural activities would contribute over 70% towards employment and 35% towards GDP [3]. Mold and Mukwaya (2017) and Pasara and Dunga (2019) highlighted that the trade potential for agriculture was an increase by approximately 16% and 18%, respectively [10,13]. Although these figures provide some insight into the effects of trade on the agricultural sector as a whole, these macro figures mask the details which may be required to provide relevant policy prescriptions for the sustainability of food security in the region.…”

Section: Trade Overviewmentioning

confidence: 99%

“…Taking into account these and other dynamics, there is therefore a need not only for an increase in sustainable food supply and food security, but also efficient measures to redistribute that food to deprived economic regions [7,9]. It is within this broad context that African leaders have decided, perhaps for the first time, to look for internal ways to address Africa's perennial challenges of poverty and inequality at the continental level by signing the African Continental Free Trade Agreement (AfCFTA) in March, 2018 in Kigali Rwanda [10]. The rationale behind African economic integration is stimulating intra-trade and promoting macroeconomic convergence, thereby reducing inequalities between wealth and poor economic regions [11,12].…”

Section: Introductionmentioning

confidence: 99%

“…The result will be a more fragile position in terms of food security, which in this case will be an unintended consequence. In addition, FTAs also imply a loss in customs revenue and as Pasara and Dunga (2019) indicated, this customs revenue generally forms a significant part of overall government revenue, which in some cases is as high as 50% [10].…”

Section: Introductionmentioning

confidence: 99%

See 4 more Smart Citations

The Effects of AfCFTA on Food Security Sustainability: An Analysis of the Cereals Trade in the SADC Region

Pasara

Diko

2020

Sustainability

View full text Add to dashboard Cite

The signing of the African Continental Free Trade Agreement (AfCFTA) has stimulated a lot of trade potential in Africa that could see the continent significantly improving its intra-trade levels, thereby boosting the economic welfare of Africans. In light of food security sustainability in the Southern African Development Community (SADC) region, this paper employed the World Integrated Trade Solution, Software for Market Analysis and Restrictions on Trade (WITS-SMART) simulation model to assess the potential effects of the AfCFTA on trade in cereals. Cereals have been regarded as the most critical component of food security. The model indicated trading partners for each of the 15 SADC countries, their level of trade creation, trade diversion, consumer surplus, welfare and revenue effects of any regional trade agreement. The results indicated that the AfCFTA will only lead to positive outcomes in four (Angola, the Democratic Republic of Congo, Madagascar and Namibia) of the fifteen SADC countries, with the rest remaining unchanged. In general, previously closed economies, that is, economies which were not part of a free trade agreement (FTA) or a deeper arrangement will stand to gain more than open economies because they are already opened up at the free trade level, which is equivalent to the AfCFTA. Thus, as far as cereals and food security is concerned, the AfCFTA will add minimal value. However, the overall value gains are likely to be greater when all food categories are included in the simulations. In general, the study recommends that African countries should deepen their integration levels to perhaps common markets where production factors, that is, labour and capital, become mobile. This will have multiplier effects in improving continental food security sustainability from a trade perspective.

show abstract

Section: Methodsmentioning

confidence: 99%

Section: Trade Overviewmentioning

confidence: 96%

Section: Trade Overviewmentioning

confidence: 99%