IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/92964.html

Revenue, Welfare and Trade Effects of European Union Free Trade Agreement on South Africa

Author

Listed:
  • GUEI, KORE MARC ANTOINE

Abstract

The study used the partial equilibrium WITS-SMART Simulation Model to assess the impact of liberalization under the Trade Development and Cooperation Agreement (TDCA) of a free trade area between the EU and South Africa. The findings of the study reveal that total trade effects in South Africa are likely to surge by US$1.036 billion with a total welfare valued at US$134 million. Dismantling tariffs on all EU goods would be beneficial to consumers through net trade creation. Total trade creation would be US$782 million. However, South African producers are likely to contribute a trade diversion of US$254 million which has a negative impact on consumer welfare. The country might also experience a revenue loss amounting to US$562 million due to the removal of tariffs. On trade, the country’s export and import to the EU is expected to increase by US$12.419 million and US$1.266 million respectively. To mitigate revenue loss, the country should try to diversify its current tax base.

Suggested Citation

  • Guei, Kore Marc Antoine, 2017. "Revenue, Welfare and Trade Effects of European Union Free Trade Agreement on South Africa," MPRA Paper 92964, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:92964
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/92964/1/MPRA_paper_92964.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. repec:cup:cbooks:9781107034662 is not listed on IDEAS
    2. Othieno, Lawrence & Shinyekwa, Isaac, 2011. "Trade, Revenue And Welfare Effects Of The East African Community Customs Union Principle Of Asymmetry On Uganda: An Application Of Wits-Smart Simulation Model," Research Series 150480, Economic Policy Research Centre (EPRC).
    3. Martin Cihak & Asli Demirguc-Kunt & Erik Feyen & Ross Levine, 2013. "Financial Development in 205 Economies, 1960 to 2010," Journal of Financial Perspectives, EY Global FS Institute, vol. 1(2), pages 17-36.
    4. Emeka Nkoro & Aham Kelvin Uko, 2016. "Autoregressive Distributed Lag (ARDL) cointegration technique: application and interpretation," Journal of Statistical and Econometric Methods, SCIENPRESS Ltd, vol. 5(4), pages 1-3.
    5. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    6. Brooks,Chris, 2014. "Introductory Econometrics for Finance," Cambridge Books, Cambridge University Press, number 9781107661455, December.
    7. Abdullahi D. Ahmed & Abu N.M. Wahid, 2011. "Financial structure and economic growth link in African countries: a panel cointegration analysis," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 38(3), pages 331-357, August.
    8. Levine, Ross & Zervos, Sara, 1998. "Stock Markets, Banks, and Economic Growth," American Economic Review, American Economic Association, vol. 88(3), pages 537-558, June.
    9. Bruce D. Smith & John H. Boyd, 1998. "The evolution of debt and equity markets in economic development," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 12(3), pages 519-560.
    10. Levine, Ross, 2002. "Bank-Based or Market-Based Financial Systems: Which Is Better?," Journal of Financial Intermediation, Elsevier, vol. 11(4), pages 398-428, October.
    11. Levine, Ross & Renelt, David, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review, American Economic Association, vol. 82(4), pages 942-963, September.
    12. Demirguc-Kunt, Ash & Levine, Ross, 1996. "Stock Market Development and Financial Intermediaries: Stylized Facts," The World Bank Economic Review, World Bank, vol. 10(2), pages 291-321, May.
    13. Elbehri, Aziz & Hertel, Thomas, 2006. "A Comparative Analysis of the EU-Morocco FTA vs. Multilateral Liberalization," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 21, pages 496-525.
    14. repec:rza:wpaper:482 is not listed on IDEAS
    15. Mustapha Sadni Jallab & Lahsen Abdelmalki, 2007. "The Free Trade Agreement Between the United States and Morocco: The Importance of a Gradual and Assymetric Agreement," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 22, pages 852-887.
    16. Philip Arestis & Ambika Luintel & Kul Luintel, 2010. "Financial structure and economic growth: evidence from time series analyses," Applied Financial Economics, Taylor & Francis Journals, vol. 20(19), pages 1479-1492.
    17. Chris Milner & Oliver Morrissey & Andrew McKay, 2005. "Some Simple Analytics of the Trade and Welfare Effects of Economic Partnership Agreements," Journal of African Economies, Centre for the Study of African Economies, vol. 14(3), pages 327-358, September.
    18. Robert M. Stern & Jonathan Francis & Bruce Schumacher, 1976. "Price Elasticities in International Trade," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-03137-5, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Glenn Jenkins & Shahrzad Safaeimanesh, 2021. "Estimation of the Potential Economic Welfare Gains to SACU from Trade Facilitation," Working Paper 1462, Economics Department, Queen's University.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kore Marc Guei, 2019. "Does financial structure matter for economic growth: evidence from South Africa," Economics Bulletin, AccessEcon, vol. 39(3), pages 1941-1957.
    2. Petra Valickova & Tomas Havranek & Roman Horvath, 2015. "Financial Development And Economic Growth: A Meta-Analysis," Journal of Economic Surveys, Wiley Blackwell, vol. 29(3), pages 506-526, July.
    3. Chung-Hua Shen & Chien-Chiang Lee & Shyh-Wei Chen & Zixiong Xie, 2011. "Roles played by financial development in economic growth: application of the flexible regression model," Empirical Economics, Springer, vol. 41(1), pages 103-125, August.
    4. Xu Guangdong, 2021. "Reassessing the Literature on the Relationship Between Financial Structure and Economic Growth," Review of Economics, De Gruyter, vol. 72(2), pages 149-182, August.
    5. Leonardo Gambacorta & Jing Yang & Kostas Tsatsaronis, 2014. "Financial structure and growth," BIS Quarterly Review, Bank for International Settlements, March.
    6. Guangdong Xu, 2022. "From financial structure to economic growth: Theory, evidence and challenges," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 51(1), February.
    7. Stati Statev, 2009. "The Interaction between the Banking System and the Real Economy (Part One: Theory and Methodology)," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 7, pages 38-66.
    8. repec:qeh:qehwps:qehwps51 is not listed on IDEAS
    9. Stati Statev, 2009. "The Interaction between the Banking System and the Real Economy (Part One: Theory and Methodology)," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 3-28.
    10. Al Mamun, Md & Sohag, Kazi & Shahbaz, Muhammad & Hammoudeh, Shawkat, 2018. "Financial markets, innovations and cleaner energy production in OECD countries," Energy Economics, Elsevier, vol. 72(C), pages 236-254.
    11. Agata Wierzbowska, 2025. "Banking sector size and economic performance in the Euro area countries," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 52(3), pages 435-456, August.
    12. Statty Stattev, 2009. "Interactions between Financial Development and Economic Growth: Theoretical Approaches and Solutions," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 55-79.
    13. Kim, Dong-Hyeon & Lin, Shu-Chin & Chen, Ting-Cih, 2016. "Financial structure, firm size and industry growth," International Review of Economics & Finance, Elsevier, vol. 41(C), pages 23-39.
    14. Salvatore Capasso, 2006. "Stock Market Development and Economic Growth," WIDER Working Paper Series RP2006-102, World Institute for Development Economic Research (UNU-WIDER).
    15. Keith Blackburn & Niloy Bose & Salvatore Capasso, 2005. "Financial Development, Financing Choice and Economic Growth," Review of Development Economics, Wiley Blackwell, vol. 9(2), pages 135-149, May.
    16. Ergungor, O. Emre, 2008. "Financial system structure and economic growth: Structure matters," International Review of Economics & Finance, Elsevier, vol. 17(2), pages 292-305.
    17. Klagge Britta & Zademach Hans-Martin, 2018. "International capital flows, stock markets, and uneven development: the case of Sub-Saharan Africa and the Sustainable Stock Exchanges Initiative (SSEI)," ZFW – Advances in Economic Geography, De Gruyter, vol. 62(2), pages 92-107, May.
    18. Salvatore Capasso, 2006. "Stock Market Development and Economic Growth: A Matter of Information Dynamics," CSEF Working Papers 166, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    19. Fase, M. M. G. & Abma, R. C. N., 2003. "Financial environment and economic growth in selected Asian countries," Journal of Asian Economics, Elsevier, vol. 14(1), pages 11-21, February.
    20. Didier, Tatiana & Levine, Ross & Llovet Montanes, Ruth & Schmukler, Sergio L., 2021. "Capital market financing and firm growth," Journal of International Money and Finance, Elsevier, vol. 118(C).
    21. Fung, Michael K., 2009. "Financial development and economic growth: Convergence or divergence?," Journal of International Money and Finance, Elsevier, vol. 28(1), pages 56-67, February.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:92964. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.