Trade openness and investment in North Africa: A CGE application to deep and comprehensive free trade areas (DCFTAs) between the EU and respectively Egypt, Morocco and Tunisia
The aim of this paper is to provide an impact analysis of deep and comprehensive free trade areas (DCFTAs) between the European Union (EU) and most of the North-African (NAF) countries – namely Egypt, Morocco and Tunisia. Scenarios are modelled with MAGNET, a general equilibrium model, and focus on trade liberalisation including non-tariff measures (NTMs) on the one hand, increases in foreign direct investments (FDIs) and capital flows on the other. They assume either broad productivity gains in all sectors of NAF countries, or targeted productivity gains in the agricultural sector aiming to reduce losses (waste) in NAF countries' agricultural production, post-harvest handling and storage. Results suggest that economic growth is stimulated mostly by widespread productivity gains, and boosted by trade liberalisation. Positive impacts on economic growth could thus be intensified by combining pro-investment policies with comprehensive trade liberalisation, especially the removal of NTMs. The effects on jobs and food security remain ambiguous.
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Policy Research Working Paper Series
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