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GTAP Resources: Resource Display

GTAP Resource #1643

"A Comparative Analysis of the EU-Morocco FTA vs. Multilateral Liberalization"
by Elbehri, Aziz and Thomas Hertel

An applied general equilibrium model with oligopoly and scale economies, based on detailed plant-level data, is used to contrast the impacts of the Morocco-EU free trade area (FTA) to multilateral trade liberalization on Morocco’s economy. Simulation results show that the FTA agreement is likely to have adverse effects on Morocco due to: (a) deteriorating terms of trade, (b) reductions in output per firm in industries dominated by scale economies, (c) diversion of imports away from relatively low cost, non-EU suppliers, and (d) potentially adverse effects on the aggregate demand for labor which could exacerbate already high levels of unemployment. We contrast this FTA with a multilateral liberalization scenario along the lines of those proposed under the Doha Development Round and find this to be more beneficial to Morocco, despite the associated income transfer from the EU to Morocco. The difference may be attributed to: (a) lesser terms of trade losses, (b) positive scale effects, (c) non-preferential liberalization of imports into Morocco, and (d) a positive impact on aggregate labor demand and hence unemployment. We conclude that Morocco would be better off pursuing trade liberalization in the multilateral arena.

JEL classification: F12, F14, F15

Keywords: Applied general equilibrium; Market Structure; Trade liberalization; Developing economies; Morocco

Resource Details (Export Citation) GTAP Keywords
Category: Working Paper
Status: Published
By/In: GTAP Working Paper No. 30
Date: 2004
Created: Conner, J. (12/13/2004)
Updated: Batta, G. (10/1/2007)
Visits: 36,411
- Africa (North)

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  File format GTAP Resource 1643  (5.0 MB)   Replicated: 0 time(s)
  File format GTAP Working Paper No. 30  (187.1 KB)   Replicated: 0 time(s)
  File format GTAP Working Paper No. 30 - Appendices  (35.5 KB)   Replicated: 0 time(s)

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