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The Impact of the COMESA-EAC-SADC Tripartite Free Trade Agreement on the South African Economy

Author

Listed:
  • Leone Walters

    (Department of Economics, University of Pretoria, South Africa)

  • Heinrich R. Bohlmann

    (Department of Economics, University of Pretoria, South Africa)

  • Matthew W. Clance

    (Department of Economics, University of Pretoria, South Africa)

Abstract

This paper analyses the e¤ects of the COMESA-EAC-SADC Tripartite Free Trade Agreement (TFTA) on the South African economy using a global Computable General Equilibrium (CGE) model. Simulation results show that South Africa’s economy gains from the implementation of the trade agreement with GDP rising by more than 1 per cent relative to the baseline. This win in overall economic activity occurs on the back of a term of trade increase and a surge in regional trade, which allows for higher levels of both exports and imports. The boost to exports stimulates local industries, whilst relatively cheaper imports lead to welfare gains for local consumers. Increased trade and industry activity causes higher demand for endowments, including skilled and unskilled labour, capital and land, pushing up wages and capital rentals.

Suggested Citation

  • Leone Walters & Heinrich R. Bohlmann & Matthew W. Clance, 2016. "The Impact of the COMESA-EAC-SADC Tripartite Free Trade Agreement on the South African Economy," Working Papers 201669, University of Pretoria, Department of Economics.
    • Handle: RePEc:pre:wpaper:201669
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    Computable General Equilibrium (CGE) Modelling; Free Trade Agreement; South Africa;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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