How Vulnerable is Sub-Saharan Africa to Geoeconomic Fragmentation?
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Summary:
This paper studies the potential effects of geoeconomic fragmentation (GEF) in the sub-Saharan Africa region (SSA) through quantifying potential long-term economic costs. The paper considers two alternative GEF scenarios in which trade relations are fully or partially curtailed across world economies. Our quantification relies on a multi-country multi-sector general equilibrium model and takes a deep dive into the impact across SSA’s oil-rich, other resource-rich and non-resource-rich countries. The results are based on a detailed dataset including information for 136 tradable primary commodity and 24 manufacturing and services sectors in 145 countries—32 of which are in SSA. We find that under GEF, SSA could experience long-term wellfare losses of approximately 4 percent of GDP, twice the losses of the rest of the world. This strong effect results from the large losses of other resource-rich and non-resource rich countries in SSA, given their high dependence on commodity trade. However, if the world experiences a less severe GEF-induced trade disruption—a strategic decoupling—SSA countries could derive minor gains from the re-shuffling of global market supply, specially in energy products.
Series:
Working Paper No. 2024/083
Subject:
Exports International trade Oil exports Trade agreements Trade balance Trade barriers
Frequency:
regular
English
Publication Date:
April 5, 2024
ISBN/ISSN:
9798400270796/1018-5941
Stock No:
WPIEA2024083
Format:
Paper
Pages:
27
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