The Common Market for Eastern and Southern Africa (COMESA) is a Free Trade Area (FTA) regional tr... more The Common Market for Eastern and Southern Africa (COMESA) is a Free Trade Area (FTA) regional trade agreement in Africa. Currently, Ethiopia is negotiating to join COMESA FTA. This study assesses the impact of three regional trade arrangements, COMESA FTA, customs unions, and the European Partnership Agreement (EPA) on the economy of Ethiopia. The analysis is based on a static Global Trade Analysis Project (GTAP) model, version 9 database. Unlike previous studies, the customs union scenarios are designed at the detailed Harmonized System (HS) level. COMESA FTA (scenario 1) with standard GTAP model results in a welfare loss for Ethiopia due to negative terms of trade and investment-saving effect, but with unemployment closure (scenario 2); Ethiopia enjoys a welfare gain mainly due to endowment effect. In scenario 3 (COMESA customs union) and scenario 4 (European Partnership Agreement), Ethiopia loses due to negative terms of trade and investment-saving effect. There is a large incre...
Common Market for Eastern and Southern Africa (COMESA) is one of the eight " building blocks " re... more Common Market for Eastern and Southern Africa (COMESA) is one of the eight " building blocks " regional economic communities recognized by the African Union (AU) for the establishment of Continental Free Trade Area (CFTA). This study focuses on analyzing the implication of Ethiopia-COMESA Free Trade Agreement (Et-COMESA FTA), COMESA Customs Union (CU), and European Partnership Agreement (EPA) on the economies of COMESA member countries. The study uses standard Global Trade Analysis Project (GTAP) model version 9 database. The result indicates that with full FTA among all countries new FTA member countries reported a large expansion in their GDP while Ethiopia experiences loss in GDP. Nevertheless, compared to full FTA, customs union expands the economies of most COMESA countries. By contrast, EPA shrinks most COMESA countries GDP with the largest loss goes to REA, Zimbabwe, and Kenya. This higher loss in GDP comes from a drop in domestic consumption and investment, although trade balance is positive for most countries. The trade effect on the economy of most COMESA country is mixed, but some countries reported a growth in their export and import. Et-COMESA FTA has positive trade effect for most member countries compared to a customs union. Furthermore, the export and import of most COMESA countries grow with EPA, but with Brexit, the trade effect is lesser. Finally, COMESA countries reported aggregate welfare gain with FTA while CU and EPA result in net welfare loss. EPA reduces the well-being of most COMESA countries, but world welfare improves due to substantial welfare gain from EU-27 and UK. This study concludes that full FTA among COMESA countries and EPA has significant trade effect for most COMESA countries. However, regarding welfare, FTA and CU is preferred to EPA.
The Common Market for Eastern and Southern Africa (COMESA) is a Free Trade Area (FTA) regional tr... more The Common Market for Eastern and Southern Africa (COMESA) is a Free Trade Area (FTA) regional trade agreement in Africa. Currently, Ethiopia is negotiating to join COMESA FTA. This study assesses the impact of three regional trade arrangements, COMESA FTA, customs unions, and the European Partnership Agreement (EPA) on the economy of Ethiopia. The analysis is based on a static Global Trade Analysis Project (GTAP) model, version 9 database. Unlike previous studies, the customs union scenarios are designed at the detailed Harmonized System (HS) level. COMESA FTA (scenario 1) with standard GTAP model results in a welfare loss for Ethiopia due to negative terms of trade and investment-saving effect, but with unemployment closure (scenario 2); Ethiopia enjoys a welfare gain mainly due to endowment effect. In scenario 3 (COMESA customs union) and scenario 4 (European Partnership Agreement), Ethiopia loses due to negative terms of trade and investment-saving effect. There is a large incre...
Common Market for Eastern and Southern Africa (COMESA) is one of the eight " building blocks " re... more Common Market for Eastern and Southern Africa (COMESA) is one of the eight " building blocks " regional economic communities recognized by the African Union (AU) for the establishment of Continental Free Trade Area (CFTA). This study focuses on analyzing the implication of Ethiopia-COMESA Free Trade Agreement (Et-COMESA FTA), COMESA Customs Union (CU), and European Partnership Agreement (EPA) on the economies of COMESA member countries. The study uses standard Global Trade Analysis Project (GTAP) model version 9 database. The result indicates that with full FTA among all countries new FTA member countries reported a large expansion in their GDP while Ethiopia experiences loss in GDP. Nevertheless, compared to full FTA, customs union expands the economies of most COMESA countries. By contrast, EPA shrinks most COMESA countries GDP with the largest loss goes to REA, Zimbabwe, and Kenya. This higher loss in GDP comes from a drop in domestic consumption and investment, although trade balance is positive for most countries. The trade effect on the economy of most COMESA country is mixed, but some countries reported a growth in their export and import. Et-COMESA FTA has positive trade effect for most member countries compared to a customs union. Furthermore, the export and import of most COMESA countries grow with EPA, but with Brexit, the trade effect is lesser. Finally, COMESA countries reported aggregate welfare gain with FTA while CU and EPA result in net welfare loss. EPA reduces the well-being of most COMESA countries, but world welfare improves due to substantial welfare gain from EU-27 and UK. This study concludes that full FTA among COMESA countries and EPA has significant trade effect for most COMESA countries. However, regarding welfare, FTA and CU is preferred to EPA.
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