Dynamic Effects of an Economic Partnership Agreement: Implications for Senegal

In this paper, I use a dynamic recursive computable general equilibrium to evaluate, for the economy of Senegal, the dynamic effects of an economic Partnership Agreement between West African countries and the European Union. In the simulation, the liberalization scheme is designed in a way similar to the interim agreement signed by Cote d’Ivoire and Ghana. The effects described are the shifts from the baseline numbers. I found that the production of agricultural goods will decrease, affecting employment negatively, particularly in unskilled labor, since this sector is very labor intensive. In fact, employment drops at around 0.2 percent a year, during the simulation period (2012-2030). GDP grows on average by 1.9 percent a year. The effects of the economic partnership agreement closely mirror the results of a free trade agreement between Senegal and the European Union, implying that a customs union between West African countries is not necessary to reap of the benefit of the former.