Assessing the Consequences of the Economic Partnership Agreement on the Ethiopian Economy

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Assessing the Consequences of the Economic Partnership Agreement on the Ethiopian Economy

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Ben Hammouda, Hakim
Karingi, Stephen
Ouedraogo, Ben Idrissa
Oulmane, Nassim
Sadni Jallab, Mustapha

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Abstract

The results presented indicate that a free trade area would reinforce the linkages between Ethiopia and European countries, including traditional partners such as Italy, with implications for the regional integration arrangements that Ethiopia is currently involved in. There will be significant trade diversion away from other African countries currently trading with Ethiopia. The diversion will occur in the lowtechnology sectors, which are potentially good foundations for deepened regional integration based on trade in industrial goods. The results further indicate some important implications with respect to Ethiopia’s industrialization strategy. The liberalization of industrial sectors result in more trade effects, particularly negative trade diversion, compared to the results from agricultural liberalization. The loss in revenue, which is a strong feature in general liberalization, is at the sectoral level, more pronounced in the industrial liberalization. The economic structure of Ethiopia, which supports self-reliance in food from the agriculture sector, underpins the limited losses in agriculture as compared to the industrial sector. Clearly, instead of opening the doors to economic diversification, the EPA could lead Ethiopia to deepen its comparative advantages in agricultural products.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 13361.

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Date of creation: Oct 2006
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Handle: RePEc:pra:mprapa:13361

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Find related papers by JEL classification:
F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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Sadni Jallab, Mustapha & Karingi, Stephen & Oulmane, Nassim & Perez, Romain & Lang, Rémi & Ben Hammouda, Hakim, 2005. "Economic and Welfare Impacts of the EU-Africa Economic Partnership Agreements," MPRA Paper 12875, University Library of Munich, Germany. [Downloadable!]

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