Predicting African trade considering uncertainty by scenario planning

Abstract

PurposeThis study predicts the growth of Africa's international trade from 2011 to 2040 by accounting for the uncertainties in the continent.Design/methodology/approachThis study applies a scenario planning method (SPM) to develop multiple future scenarios considering uncertainties inherent in African socio-economies related to the success or failure of economic and industrial policies (EIPs) and economic corridor development policies (ECDPs). Subsequently, based on these future scenarios, the growth of African international trade from 2011 to 2040 is predicted using the Global Trade Analysis Project (GTAP) model.FindingsThe predictions reveal that if the EIPs and the ECDPs are successfully implemented, Africa, as a whole, will experience a significant increase in trade, estimated at US$ 1,905 billion and US$ 1,599 billion for exports and imports, respectively, compared to the scenario in which they fail. However, the effects vary greatly by country or region and industrial sector. The results also show that African intra-regional trade is rapidly expanding and is the second-largest after trade with Europe followed by other continents.Originality/valueSPM, which allows us to reflect the uncertainties affecting African international trade prediction, is applied to build the future scenarios. The study comprehensively predicts African future international trade by setting a wide range of exogenous variables and parameters (input conditions for the GTAP model) related to EIPs and ECDPs.