Economic welfare analysis of coarse grain trade under a trade liberalization policy within the Economic Community of West African States

This study analyzed the economic welfare implications of the 1990 intraregional trade liberalization scheme within the Economic Community of West African States (ECOWAS) on member country producers and consumers. Four countries were chosen as a point of focus: Burkina Faso, Cote d'Ivoire, Ghana and Mali, and two commodities: millet and sorghum. The supply and demand functions were estimated using time series data from 1970 to 1990 obtained at the level of administrative regions within each of the four countries. Optimal production, consumption, trade quantities and trade flows were determined using the REACTT model, a spatial price equilibrium solution algorithm. Two trade scenarios were simulated. The first examined trade flows under the 1990 tariff structures and the second examined trade flows under the proposed zero tariff rates.The REACTT model results showed that removal of the tariffs would increase the crossborder trade flows between the four countries by about 12% for millet and 38% for sorghum. The welfare calculations showed that in the case of millet, all four countries would have net positive gains to the tune of $4.6 million in total. For sorghum, Burkina Faso, Ghana and Mali would have net positive gains, C ote d'Ivoire would have a net welfare loss, and the net impact on all four countries would be a positive gain of about $9.3 million. The results of the REACTT model and the welfare calculations suggest that intra-ECOWAS trade liberalization would increase total trade flows and total economic well being of the member countries