Dynamic Effects of an Economic Partnership Agreement: Implications for Senegal

In this paper, I use a dynamic recursive computable general equilibrium to evaluate, for the economy of Senegal, the dynamic e§ects of an economic Partnership Agreement between West African countries and the European Union. In the simulations, the liberalization scheme is designed to mirror the interim agreement signed by CÙte díIvoire and Ghana. The e§ects described are the shifts from the baseline numbers. I Önd that the production of agricultural goods will decrease, a§ecting employment negatively, particularly unskilled labor, since this sector is very labor intensive. In fact, employment drops by around 0.2 percent a year during the simulation period (2012-2030). GDP grows on average by 1.9 percent a year. The e§ects of the economic partnership agreement closely mirror the results of a free trade agreement between Senegal and the European Union, implying that a customs union between West African countries is not necessary to reap the beneÖts of the EPA for Senegal. The directions of these e§ects are stable when we use higher elasticities, or di§erent closure rules.