TITLE:
General Equilibrium Effects of Trade Liberalization in ECOWAS Countries: Structural Gravity Approach
AUTHORS:
Mariame Bakouan, Dorothee Boccanfuso
KEYWORDS:
Free Trade, Intra Regional Trade, Structural Gravity Model
JOURNAL NAME:
Modern Economy,
Vol.12 No.1,
January
29,
2021
ABSTRACT: This study estimates the general equilibrium effects
of the Economic Community of West African States (ECOWAS) free trade agreement,
established in 1990, using the structural gravity model. Following the Anderson
et al. (2015) methodology, we used country fixed effects as a proxy for
multilateral resistance terms, which are considered as general equilibrium
trade costs, to estimate the effects of regional trade liberalization on the
ECOWAS member countries welfare. This study used data on 45 partners’
industrial trade flows from 1980 to 2006. The results indicate that trade
liberalization has had positive effects on ECOWAS members welfare, via consumer
or producer welfare channels. The latter channel induces an important change in
real GDP relative to the former channel-countries with higher levels of
producer welfare than consumer welfare experience greater changes in real GDP.