Dynamic Effects in Senegal of the Regional Trade Agreement Among Uemoa Countries

Abstract

In an international setting characterized by a proliferation of regional trade agreements, seven countries of the West African Economic and Monetary Union (UEMOA) have created a customs union. The implementation of the reform raises concerns in some UEMOA countries, like Senegal, where government is highly dependent on trade taxes and firms enjoy a relatively high level of protection. In this paper, we build an intertemporal general equilibrium model of Senegal to analyze the dynamic effects of the reform. Our simulation results cast light on the desirability for Senegal to pursue regional economic integration along with an outward-looking strategy. We find that the reform is welfare-improving and expansionary, with some sectoral diversity. In the long run, government and foreign debts increase.

JEL Classification: C68, D58, F13