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GTAP Resource #2002

"Will Madagascar benefit from the South African market opening to SADC goods ?"
by Ramilison, Eric Norbert

Author : Eric Norbert RAMILISON, Economist Researcher in CREAM (a Malagasy Economic Research Center) phone : +26120 22 296 23, mobile : +26132 04 00 811, fax : +26120 325 65, email :

Tool used for the analysis : GTAP version 5.4, Applied General Equilibirum modelling and Partial Equilibrium modeling with the WITS (Word Integrated Trade Solution) software : WITS is developed by UNCTAD and World Bank. Its used for analyzing international trade issue. Goods in the analysis are detailed with 6-digit with the 1996 harmonized system.

Target of the discussion paper to show that:

- Sub -regions of Southern Africa will gain from a FTA implemented within SADC, and free trade liberalisation reveals to be a pro-poor measurment as it result an increasing of demand for unskilled labour ;
- a trade partner will not necessary benefit from a tariff reduction when there are initially many beneficiaries of the trade policy.

Abstract :

After hesitating during more than a decade, Madagascar which is already a member of COMESA (Common Market of Eastern and Southern Africa) and is negotiating the new Economic Partnership Agreement between ACP and EU as a member of ESA (Eastern and Southern Africa) group decides to join SADC (Southern African Development Community). By doing that, Madagascar expects to enhance its trade flows with SADC country in general and with South Africa in particular. But will Madagascar really gain from the South African market opening to SADC goods ?

For analyzing this issue, two kinds of modelling approaches are used. Firts, we use GTAP modelling to verify if each sub-division of SADC region can benefit from FTA within this community, and to check with which economic activity will the sub-region including Madagascar from the FTA. Then we find that FTA boosts export of the Rest of SADC to South Africa, and every sub-region will record a positive change of welfare even if safeguard measurement is implemented for several commodities.

In the second stage, we focus on the effect of tariff removal of South Africa to all goods from other SADC members. In this case, we use WITS software with its possibility of getting information on 6-digir harmonized system of goods. Despite the fact that the trade liberalisation reveals to be a pro-poor strategy for the Rest of SADC (excluding SACU), it looks difficult to state whether Madagascar will benefit or not from the FTA within SADC. One wonders if Madagascar is not paying now its weak linkages to Southern Africa especially with the Republic of South Africa, as competion from some SADC members is strong.

Resource Details (Export Citation) GTAP Keywords
Category: 2006 Conference Paper
Status: Published
By/In: Presented at the 9th Annual Conference on Global Economic Analysis, Addis Ababa, Ethiopia
Created: Ramilison, E. (4/28/2006)
Updated: Ramilison, E. (4/28/2006)
Visits: 2,643
No keywords have been specified.

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