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GTAP Resource #6601

"Informal Cross-Border Trade in Africa: by how much does it change the estimated impact of the African Continental Free Trade Area?"
by Traore, Fousseini, David Laborde and Antoine Bouët

The objective of this paper is to estimate the impact of the African Continental Free Trade Area (AfCFTA) using a computable general equilibrium model and incorporating modeling and data on informal trade. Taking informal trade into account is likely to change the impact assessment of the AfCFTA because it changes the degree of openness of African countries, a key parameter for the magnitude of the shock and the impact in terms of welfare. The inclusion of informal trade should also make it possible to estimate the degree of formalization of informal trade flows. The impact study is based on the MIRAGRODEP model. The main data source is the GTAP database, and the version used for this impact study is GTAP10. The protection data mainly come from the MAcMAP-HS6. Tariff aggregation is based on the Consistent Policy Aggregator approach. Sensitive products and products excluded from liberalization are selected according to the political economy criterion of Jean, Laborde and Martin (2010). Informal trade is modeled by adding a level in the nesting tree representing country s's demand for imports of product k from country r, when r and s are African and adjacent. This nesting level expresses a choice between formal and informal trade. The databases used to calibrate informal trade are the ECO-ICBT database (West Africa), the Food Security and Nutrition Working Group database (East Africa), and the UBOS (Central Africa). The AfCFTA will be simulated based on the most detailed geographical disaggregation possible concerning the African continent. Two scenarios will be compared: a scenario with traditional modeling without informal trade, a scenario with informal trade modeling.

Resource Details (Export Citation) GTAP Keywords
Category: GTAP Application
Status: Not published
Date: 2022
Created: Traore, F. (4/15/2022)
Updated: Batta, G. (5/30/2022)
Visits: 747
- Preferential trading arrangements
- Africa (Central)
- Africa (East)
- Africa (North)
- Africa (Southern)
- Africa (West)

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