How Vulnerable is Sub-Saharan Africa to Geoeconomic Fragmentation?

By Marijn A. Bolhuis, Hamza Mighri, Henry Rawlings, Ivanova Reyes, Qianqian Zhang

April 5, 2024

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Marijn A. Bolhuis, Hamza Mighri, Henry Rawlings, Ivanova Reyes, and Qianqian Zhang. How Vulnerable is Sub-Saharan Africa to Geoeconomic Fragmentation?, (USA: International Monetary Fund, 2024) accessed November 8, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

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.

Subject: Exports, International trade, Oil exports, Trade agreements, Trade balance, Trade barriers

Keywords: Commodities, Costs, Exports, Geoeconomic fragmentation, Global, Global integration, Oil exports, SSA goods Trade, SSA Trade, Sub-Saharan Africa, Sub-Saharan Africa region, Trade, Trade agreements, Trade assumption, Trade balance, Trade barriers, Trade disruption, Trade diversion

Publication Details

Pages:

27
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2024/083
Stock No:

WPIEA2024083
ISBN:

9798400270796
ISSN:

1018-5941

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