Impacts of Re-export Demand on Benin’s Economy

Abstract

This article analyses the impact of re-export demand on the Beninese economy. Re-export is dominant in Benin’s trade and may represent risks to the economy’s vulnerability. The methodology uses a dynamic computable general equilibrium model. It simulates two scenarios: the first considers a one-off decline in re-export demand in the first year, while the second analyses the impact of a recurring annual shock. The results, both at the aggregate and sectoral levels, indicate that the decline in re-export demand would negatively affect real GDP, domestic and net external demand, and most industries. This article extends the existing knowledge on the re-export phenomenon by adding a dynamic analysis of its potential impact at the aggregate and sectoral levels. The results confirm that re-export is a source of vulnerability for the Beninese economy. The authorities should focus on diversifying the economy and strengthening the competitiveness of the Port of Cotonou, in order to mitigate vulnerabilities linked to re-export activities. JEL Codes: C68, F17