Abstract
The facilitation of trade is a principal objective in the context of increasing regional trade integration for the achievement of sustainable development goals. The purpose of this study is to estimate the potential annual economic gain to be had from trade facilitation by the coastal countries of the Economic Community of West African States (ECOWAS). These measures would decrease border and documentary compliance time and costs of the administration of international trade. A partial equilibrium welfare economics framework is used that employs sets of export supply and import demand elasticities for each country that are derived using a general equilibrium estimation method. The annual economic welfare gains resulting from the reduction of excessive trade compliance costs for the region are estimated to between US$1.6 billion to US$2.7 billion (2019 prices). This is between 0.24% and 0.42% of the combined GDPs of these countries. The welfare gain is between 6% and 10% of the combined governments’ budgets assigned for education, and is between 33% and 58% of their budgets allocated for health. In the absence of reform, these inefficient practices waste an amount equal to between 15% and 26% of the annual net official development assistance these countries receive.
Highlights
For developing countries, an increased level of integration into the global economy has shown to be a key driver of productivity and growth [1,2]
This study aimed to estimate the annual economic welfare gains for the coastal countries of Economic Community of West African States (ECOWAS) that could be realized by the implementation of potential reforms to eliminate the excessive trade transaction compliance costs
It investigated the contribution of regional integration and trade facilitation reforms to achieve the realization of their sustainable development goals
Summary
An increased level of integration into the global economy has shown to be a key driver of productivity and growth [1,2]. In this regard, simplifying the process of the movement of goods between countries and reducing trade transaction costs is of paramount importance. Changes in economic welfare because of trade facilitation refers to the monetary value that consumers would benefit from lower prices of imports plus the monetary value of the change in profits that producers accrue because of the reduction in the costs of doing business brought about by trade facilitation interventions. Economic welfare is measured by applying the principles enunciated by Harberger as the three basic postulates for applied welfare economics [3]
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