Embracing the African Continental Free Trade Area: Unpacking Malawi’s Economy Response to Trade Liberalization
The impact of trade liberalization on Malawi’s economy has been a hotly debated topic. To shed light on the subject, a study was conducted using the PEP-1–1 CGE model and the latest Malawi’s Social Accounting Matrix (SAM) from 2019. The results were eye-opening, revealing the potential effects of th...
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Elsevier
2024-12-01
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| Series: | Research in Globalization |
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| Online Access: | http://www.sciencedirect.com/science/article/pii/S2590051X24000613 |
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| author | Wisdom Richard Mgomezulu Paul Thangata Daniel Njiwa |
| author_facet | Wisdom Richard Mgomezulu Paul Thangata Daniel Njiwa |
| author_sort | Wisdom Richard Mgomezulu |
| collection | DOAJ |
| description | The impact of trade liberalization on Malawi’s economy has been a hotly debated topic. To shed light on the subject, a study was conducted using the PEP-1–1 CGE model and the latest Malawi’s Social Accounting Matrix (SAM) from 2019. The results were eye-opening, revealing the potential effects of the African Continental Free Trade Area (AfCFTA) on various sectors of the economy. The removal of trade tariffs is predicted to have a significant impact on prices, with a decrease of 26.31% in the agricultural sector alone, services (−7.88%), public administration (−9.92%), and manufacturing and industry (−11.23%) imposing hopes of improving food affordability and food security. However, it is expected to have adverse impacts on wage rates in the agricultural sector (−18.78%), manufacturing and construction (−19.01%), services (−2.79%) and public administration (−15.81%). Additionally, while exports are expected to increase, the country’s balance of payments may suffer as imports are likely to outweigh foreign earnings. This could also lead to a decrease in government revenue from taxes. To mitigate these effects, the study suggests implementing export restructuring strategies, particularly in industries like manufacturing and construction, and promoting diversification of local production to boost competitiveness and improve wage rates. With these measures in place, the government will not only offset potential losses but also tap into new sources of taxable income. |
| format | Article |
| id | doaj-art-05028c69ba664a85bc1835a7547dbcb3 |
| institution | Kabale University |
| issn | 2590-051X |
| language | English |
| publishDate | 2024-12-01 |
| publisher | Elsevier |
| record_format | Article |
| series | Research in Globalization |
| spelling | doaj-art-05028c69ba664a85bc1835a7547dbcb32024-12-19T10:56:58ZengElsevierResearch in Globalization2590-051X2024-12-019100252Embracing the African Continental Free Trade Area: Unpacking Malawi’s Economy Response to Trade LiberalizationWisdom Richard Mgomezulu0Paul Thangata1Daniel Njiwa2Alliance for a Green Revolution in Africa, Data & Analytics Unit, West End Towers, 4th Floor, P.O. Box 66773, Wetlands 00800, Nairobi, Kenya; Corresponding author.Alliance for a Green Revolution in Africa, Data & Analytics Unit, West End Towers, 4th Floor, P.O. Box 66773, Wetlands 00800, Nairobi, KenyaAlliance for a Green Revolution in Africa, Inclusive Markets, Trade & Finance Unit, West End Towers, 4th Floor, P.O. Box 66773, Wetlands 00800, Nairobi, KenyaThe impact of trade liberalization on Malawi’s economy has been a hotly debated topic. To shed light on the subject, a study was conducted using the PEP-1–1 CGE model and the latest Malawi’s Social Accounting Matrix (SAM) from 2019. The results were eye-opening, revealing the potential effects of the African Continental Free Trade Area (AfCFTA) on various sectors of the economy. The removal of trade tariffs is predicted to have a significant impact on prices, with a decrease of 26.31% in the agricultural sector alone, services (−7.88%), public administration (−9.92%), and manufacturing and industry (−11.23%) imposing hopes of improving food affordability and food security. However, it is expected to have adverse impacts on wage rates in the agricultural sector (−18.78%), manufacturing and construction (−19.01%), services (−2.79%) and public administration (−15.81%). Additionally, while exports are expected to increase, the country’s balance of payments may suffer as imports are likely to outweigh foreign earnings. This could also lead to a decrease in government revenue from taxes. To mitigate these effects, the study suggests implementing export restructuring strategies, particularly in industries like manufacturing and construction, and promoting diversification of local production to boost competitiveness and improve wage rates. With these measures in place, the government will not only offset potential losses but also tap into new sources of taxable income.http://www.sciencedirect.com/science/article/pii/S2590051X24000613Trade LiberalizationAfCFTA, Malawi’s EconomyCGE ModellingSocial Accounting Matrix |
| spellingShingle | Wisdom Richard Mgomezulu Paul Thangata Daniel Njiwa Embracing the African Continental Free Trade Area: Unpacking Malawi’s Economy Response to Trade Liberalization Research in Globalization Trade Liberalization AfCFTA, Malawi’s Economy CGE Modelling Social Accounting Matrix |
| title | Embracing the African Continental Free Trade Area: Unpacking Malawi’s Economy Response to Trade Liberalization |
| title_full | Embracing the African Continental Free Trade Area: Unpacking Malawi’s Economy Response to Trade Liberalization |
| title_fullStr | Embracing the African Continental Free Trade Area: Unpacking Malawi’s Economy Response to Trade Liberalization |
| title_full_unstemmed | Embracing the African Continental Free Trade Area: Unpacking Malawi’s Economy Response to Trade Liberalization |
| title_short | Embracing the African Continental Free Trade Area: Unpacking Malawi’s Economy Response to Trade Liberalization |
| title_sort | embracing the african continental free trade area unpacking malawi s economy response to trade liberalization |
| topic | Trade Liberalization AfCFTA, Malawi’s Economy CGE Modelling Social Accounting Matrix |
| url | http://www.sciencedirect.com/science/article/pii/S2590051X24000613 |
| work_keys_str_mv | AT wisdomrichardmgomezulu embracingtheafricancontinentalfreetradeareaunpackingmalawiseconomyresponsetotradeliberalization AT paulthangata embracingtheafricancontinentalfreetradeareaunpackingmalawiseconomyresponsetotradeliberalization AT danielnjiwa embracingtheafricancontinentalfreetradeareaunpackingmalawiseconomyresponsetotradeliberalization |