The Impact of Trade Liberalization on South Africa: An Analysis with a Computable General Equilibrium Model (Un modèle d'équilibre général calculable pour évaluer les effets de l'ouverture au commerce international: Le cas de l'Afrique du Sud)
Groupe d'Economie du Developpement - Lare-Efi
48 Pages Posted: 6 Dec 2007 Last revised: 23 Mar 2011
Date Written: September 2004
This article presents the results of various simulations carried out on South Africa using a computable general equilibrium (CGE) model. The aim is to analyze the effects of various trade liberalization policies on economic growth, activities dynamics, and to a less extent, on households' incomes. The CGE model consists in 43 activities, 4 production factors, 14 representative households, 10 trading regions (for the foreign trade). Some market imperfections, like unemployment, are taken into account. Two kinds of policies are simulated: the free trade agreement signed with the European Union in 1999 and the elimination of tariff barriers. Each simulation is run under four different sets of closures. Although positive, the impacts are limited, as well as on the growth of the foreign trade as on that of the GDP. Besides, trade liberalization negatively affects the activity levels of some industries, and above all, it seems to systematically increase the income inequalities.
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Keywords: South Africa, trade liberalisation, computable general equilibrium model
JEL Classification: C68, E17, O55
Suggested Citation: Suggested Citation