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


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  • Jean-Jacques Hallaert


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.

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Paper provided by International Monetary Fund in its series IMF Working Papers with number 07/66.

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Length: 30
Date of creation: 01 Mar 2007
Date of revision:
Handle: RePEc:imf:imfwpa:07/66

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Keywords: Trade policy; Southern African Development Community; Economic models; trade liberalization; trade diversion; terms of trade; regional trade; multilateral liberalization; export prices; regional integration; import prices; unskilled labor; trade agreements; trade flows; regional trade agreements; international trade; skilled labor; trade creation; world prices; trade creating; global trade analysis; global trade; average tariff; export taxes; trade integration; regional liberalization; tariff cut; export markets; export processing zones; preferential access; dynamic gains; total exports; domestic investment; tariff reduction; terms of trade effects; domestic production; volume of trade; tariff structure; world price; tariff cuts; export volume; export tax; tariff rate; trade policies; trade effects; export processing; net exports; preferential trade agreements; trade expansion; trade reform; regional trade liberalization; world economy; trade openness; partner countries; regional trade integration; food exports; unilateral trade; mfn tariffs; multilateral trade; tariff distortions; exporters; tariff reductions; preferential trade; import-substitution policies; trade pattern; full liberalization; quantitative restrictions; trade regimes; equilibrium model; preferential treatment; domestic goods; quota-free access; tariff lines; free trade; duty-free treatment; country of origin; preferential agreement; international trade agreements; multilateral reduction; area trade; multilateral trade liberalization; applied tariff; economic integration; share of exports; equilibrium assessments; elasticity of substitution; trade preferences; regional trade arrangements; common market; net trade creation; global welfare; transition period; trade regime; industry trade; bilateral trade flows; import tariffs; dynamic effects; trade agreement; international trade policies; changes in trade; trade arrangements; trade area; world trade; expansion of exports; political integration; nondiscriminatory liberalization; trade policy reform; pattern of trade; liberalizing trade; constant elasticity of substitution; trade changes; investment goods; trade structure; bilateral trade; duty-free access; trade protocol; rules of origin; free trade area; trade patterns; liberalization of trade; fostering trade;

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Cited by:
  1. Jean-Jacques Hallaert, 2008. "How Does a Domestic Tax Reform Effect Protection Against Imports? The Case of the Republic of Madagascar," IMF Working Papers 08/151, International Monetary Fund.


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