Can Regional Integration Accelerate Development in Africa? CGE Model Simulations of the Impact of the SADC FTA on the Republic of Madagascar

Author/Editor:

Jean-Jacques Hallaert

Publication Date:

March 1, 2007

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

Madagascar plans to start phasing out its customs tariffs on imports from the Southern African Development Community in 2007. This paper uses a CGE model to evaluate the impact of the SADC FTA on Madagascar economy. The results suggest that the SADC FTA would only have a limited impact on Madagascar's real GDP because the liberalization affects only a small share of its total imports. However, Madagascar's trade and production pattern would change and benefit the textile and clothing sector. Removing rigidities in the labor and capital market would increase the gains but they would remain limited. Gains from the SADC FTA become substantial only when the regional liberalization is accompanied by a multilateral liberalization.

Series:

Working Paper No. 07/66

Subject:

Africa Balance of trade Bilateral trade Economic integration Economic models International trade agreements Madagascar Patterns of trade Regional integration Southern African Development Community Trade liberalization Trade policy

English

Publication Date:

March 1, 2007

ISBN/ISSN:

9781451866308/1018-5941

Stock No:

WPIEA2007066

Format:

Paper

Pages:

30

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