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Corresponding Author

Simachew Zelalem Mengistu

Authors ORCID

https://orcid.org/0009-0003-7635-6302

Document Type

Review

Subject Areas

African Trade

Keywords

AfCFTA, Ethiopia, trade integration, GEPPML, export diversification, economic growth

Abstract

This study examines the potential impact of the African Continental Free Trade Area (AfCFTA) on Ethiopia's export growth and real GDP using the General Equilibrium Poisson Pseudo Maximum Likelihood (GEPPML) estimation model. Despite Africa's longstanding efforts toward economic integration, intra-African trade remains low, with Ethiopia's export structure heavily reliant on primary agricultural commodities and limited diversification into high-value or technology-intensive sectors. The paper employs a three-stage GEPPML approach to simulate the effects of AfCFTA, accounting for trade elasticities, multilateral resistance terms, and endogenous income adjustments.

The findings indicate that AfCFTA could enhance Ethiopia's export growth by 1.137% and real GDP growth by 2.512%, surpassing continental averages. However, the agreement may also diverge trade, reducing exports from non-member countries to Africa. The study highlights Ethiopia's comparative advantage in agriculture but underscores the need for structural reforms to diversify exports and improve competitiveness. Policy recommendations include enhancing trade facilitation, investing in infrastructure, and aligning national standards with AfCFTA requirements to maximize gains.

This research contributes to the literature by applying GEPPML as an alternative to Computable General Equilibrium (CGE) models, offering nuanced insights into AfCFTA's country-specific effects. Limitations include data constraints, which restrict dynamic analysis, suggesting a need for future research on long-term impacts. The study underscores AfCFTA's potential to transform Ethiopia's trade landscape while emphasizing strategic policy interventions to mitigate challenges.

Receive Date

06/09/2024

Accept Date

15/08/2025

Publication Date

2025

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