‘The Welfare Effects of Economic Integration in the Tripartite Free Trade Area
South Africa - 1 March 2019
Trade topics: Other
This paper employs the WITS-SMART simulation model to examine the welfare effects of economic integration in the TFTA region. The results indicate that welfare gains are skewed, and some countries and economic sectors are poised to gain more than others. Ceteris paribus, there is a proclivity for larger economies to benefit more than smaller economies, and also, restricted economies are likely to have more trade creation than already liberalised countries. The results also indicate that trade in the manufacturing sector and consumer goods will contribute the most, while the petroleum sector will contribute the least. Finally, countries pursuing restrictive policies will experience greater customs revenue loss than liberalised ones. The study concludes that assistance should be given to negatively affected countries and economic sectors to minimise the polarisation of benefits.