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Which trade integration scheme can best help SSA develop and export more processed agricultural goods?

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  • Douillet, Mathilde

Abstract

Trade integration of Sub-Saharan African (SSA) countries agriculture is pointed out as a powerful driver of agricultural growth, especially if it increases processing of agricultural products. But there is no consensus on which negotiations for increased trade integration to put first. Static effects of regional and multilateral tariff reduction shocks are simulated with the MIRAGE CGE model in order to compare them and test their coherence with the objective of enhanced value-added in agriculture. A new method is tested to treat existing data issues in the GTAP7 database that usually lead to overestimations of gains from some trade integration. Those new results reveals that even if at the world level a combination of DFQF and DDA brings the highest GDP and real income growth, for SSA an ambitious regional integration delivers as much as multilateral integration. Multilateral and regional integration differ on the pattern of agricultural growth they bring: multilateral liberalization, especially DFQF, would drive SSA countries further away from agricultural led industrialization. The increased competition leads to a reorientation of the structure of production and exports of SSA towards raw agricultural products. On the contrary, regional integration fosters the production and trade of processed agricultural products, and thus might be more in line with the stakes of economic development. Nevertheless, from a political economy perspective, identity of the gainers and losers should be considered as regional integration leads to consequent tariff revenue losses for many SSA countries. Compensation of those revenue losses could help further negotiate regional integration.

Suggested Citation

  • Douillet, Mathilde, 2011. "Which trade integration scheme can best help SSA develop and export more processed agricultural goods?," Conference papers 332114, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:332114
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    1. Heckelei, Thomas & Mittelhammer, Ronald C. & Jansson, Torbjorn, 2008. "A Bayesian Alternative To Generalized Cross Entropy Solutions For Underdetermined Econometric Models," Discussion Papers 56973, University of Bonn, Institute for Food and Resource Economics.
    2. Andrea Bonfiglio & Francesco Chelli, 2008. "Assessing the Behaviour of Non-Survey Methods for Constructing Regional Input-Output Tables through a Monte Carlo Simulation," Economic Systems Research, Taylor & Francis Journals, vol. 20(3), pages 243-258.
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