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A General Equilibrium Analysis on the Potential Effects of the African Continental Free Trade Area (AFCFTA) on African Economies

Author

Listed:
  • Cassius B. Cooper

    (PhD Student, Pan African University, Institute of Governance Humanities and Social Science, Yaoundé University II, Yaoundé, Cameroon)

  • Dr. Molem Sama

    (Professor and Head of the Department of Economics, University of Beau, Beau, Cameroon)

Abstract

This study investigates the potential impact of the African Free Continental Trade Area on welfare, gross domestic product, labor demand, industrial output, and trade. To achieve the objectives, the study uses the Global Trade Analysis Project database 11. The database was used to aggregate Sub-Saharan Africa into five major regions according to geographical location Western, Southern, Northern, Eastern, and Central Africa. Sectors were grouped into agriculture, services, utility and construction, transportation and communication, heavy manufacturing, light, manufacturing, and extraction. The simulation scenario was conducted for three periods; 2025, 2030, and 2035. The result shows that gross domestic product will increase to 8,277,010 trillion by 2030. Western Africa will contribute the highest share followed by Northern, and Southern Africa. Trade result reveals that import and export will increase throughout the simulation periods with the highest potential discovered in southern Africa to be 34.1% for imports and 33.9% for exports in 2035. Labor demand shows an increase in 2025 and 2035 but a decline in 2030 in all sectors except agriculture which shows a resilience demand for labor up to 0.41%. The industrial output shows an increase in all periods with huge potential in the service industry with a 22.8% increase in 2035 followed by transportation with an 18.59% increase in 2035. Welfare also shows an increase through the periods with allocative efficiency producing the highest contribution to welfare with a total of 30% increase in all periods.

Suggested Citation

  • Cassius B. Cooper & Dr. Molem Sama, 2024. "A General Equilibrium Analysis on the Potential Effects of the African Continental Free Trade Area (AFCFTA) on African Economies," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(4), pages 2064-2080, April.
    • Handle: RePEc:bcp:journl:v:8:y:2024:i:4:p:2064-2080
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    References listed on IDEAS

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