The influence of the AfCFTA capital and industrial goods in South Africa: A simulation analysis

South Africa is already faced with macro-challenges of suppressed economic growth, increasing unemployment, and inequality levels on one end. On the other end, the unavoidable pressures and priorities of regionalism and globalization, such as the African Continental Free Trade Agreement (AfCFTA), continue to increase. General trade theory postulates positive gains between trade openness and economic growth using various angles such as comparative advantages, economic geography, and technological transfers under convergence models among other factors. However, these generalizations often distort critical sectoral implications due to trade creation and trade diversion effects. This chapter aims to answer the potential effects of the highly celebrated AfCFTA on the Fourth Industrial Revolution (4IR) in South Africa. This chapter unveils some of the complexities which are brought about by these two majors, yet seemingly unavoidable transformations of AfCFTA and 4IR on the structure of the South African economy. This is achieved through a literature review the study found that for the two product classifications of industrial and capital goods, the applied duty rate will slightly decline from 6.83 to 6.39 (6.4% change), while the weighted rate will increase by 2.86%. Consequently, there will be an increase in South African exports, but no changes were observed for imports. The study recommends that South African policymakers should not only implement the AfCFTA but also proffer complementary policies that seek to exploit the increased market access of the three HS product categories.

Link: https://link.springer.com/chapter/10.1007/978-3-031-28686-5_18