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The trade effects of the African Continental Free Trade Area: An empirical analysis

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  • Alemayehu Geda
  • Addis Yimer

Abstract

This study examines the possible effects of the African Continental Free Trade Area (AfCFTA) agreement tariff reduction protocol on intra‐African goods trade using two approaches: trade indices and a gravity model. In both approaches, an attempt to identify the trade‐creation and trade‐diversion effects of the proposed AfCFTA is made. The two approaches combined suggest that the AfCFTA could raise intra‐African exports from the average annual value of US$ 72.7 billion (2015–2017) by about US$ 13.7 billion (by about 19%). For the success of the AfCFTA, the success in political activism needs to be combined with a continental industrial strategy that includes continental protection for infant industries in tandem with this continental liberalisation.

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  • Alemayehu Geda & Addis Yimer, 2023. "The trade effects of the African Continental Free Trade Area: An empirical analysis," The World Economy, Wiley Blackwell, vol. 46(2), pages 328-345, February.
    • Handle: RePEc:bla:worlde:v:46:y:2023:i:2:p:328-345
    DOI: 10.1111/twec.13362
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    References listed on IDEAS

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    3. Thandika Mkandawire, 2010. "On Tax Efforts and Colonial Heritage in Africa," Journal of Development Studies, Taylor & Francis Journals, vol. 46(10), pages 1647-1669.
    4. Alemayehu Geda & Haile Kebret, 2008. "Regional Economic Integration in Africa: A Review of Problems and Prospects with a Case Study of COMESA," Journal of African Economies, Centre for the Study of African Economies, vol. 17(3), pages 357-394, June.
    5. Fally, Thibault, 2015. "Structural gravity and fixed effects," Journal of International Economics, Elsevier, vol. 97(1), pages 76-85.
    6. Habtamu Shiferaw Amogne & Taiji Hagiwara, 2021. "Impact of alternative regional trade arrangements on the Ethiopian economy," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 10(1), pages 1-26, December.
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    Cited by:

    1. Debrah, Yaw A. & Olabode, Oluwaseun E. & Olan, Femi & Nyuur, Richard B., 2024. "The African Continental Free Trade Area (AfCFTA): Taking stock and looking ahead for international business research," Journal of International Management, Elsevier, vol. 30(2).
    2. Aliyu, Shehu Usman Rano & Salissu, Afees & Kale, Oyeyemi, 2024. "Migration and Youth Unemployment in Africa: Implications for the African Continental Free Trade Area," MPRA Paper 121437, University Library of Munich, Germany, revised 22 Jun 2024.
    3. Evious Zgovu & Oliver Morrissey, 2024. "Implications of AfCFTA tariff reductions for EAC exports to Africa," Discussion Papers 2024-03, University of Nottingham, CREDIT.

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