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GTAP Resource #4466

"Can reciprocal tariff elimination reduce the welfare losses due to lagging labour productivity?: An analysis of reciprocal preferential trade access between Sub-Saharan Africa and industrialized countries"
by Rakotoarisoa, Manitra A., Sangeeta Khorana and Badri Narayanan

This paper employs General Equilibrium framework modeling and estimates the effects of reciprocal preferential trade liberalization between Sub-Saharan Africa (SSA) and the European Union (EU-25) and all industrialized countries by taking differences in labour productivity into account. We use standard GTAP 7.1 version, with eight aggregated sectors and ten aggregated regions. Simulation results show that prior to reciprocal tariff elimination, when econometric estimates of labour productivity growth are included, SSA loses by USD 12.6 billion annually because of lagging productivity growth, especially in its manufacturing sector. Elimination of tariffs between SSA and all industrialized countries in agriculture and manufacturing sectors improves SSA’s welfare by USD 2 billion, as a result of an increase in endowment and allocative efficiency effects. The gains, however, are not substantial. Results also show that a minimal annual average growth rate of 3 per cent in labour productivity in manufacturing sector will lead to positive allocative and endowment efficiency effects and counter SSA welfare losses.

Resource Details (Export Citation) GTAP Keywords
Category: 2014 Conference Paper
Status: Published
By/In: Presented at the 17th Annual Conference on Global Economic Analysis, Dakar, Senegal
Date: 2014
Created: Rakotoarisoa, M. (4/15/2014)
Updated: Rakotoarisoa, M. (6/15/2014)
Visits: 2,602
- Software and modeling tools
- Labor market issues
- Technological change
- Preferential trading arrangements
- Africa (Central)
- Africa (East)
- Africa (North)
- Africa (Southern)
- Africa (West)
- Europe (Western)

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