The Impact of AfCFTA on Welfare and Trade: Nigeria and South Africa in Light of Core Export Competences

Round 1

Reviewer 1 Report

1. Short Summary : This paper is a remarkable suggestion for the trade policy in light of core export competencies and the size, growth, and consistency of the import demand in AfCFTA countries. In line with this, this paper makes a contribution to reducing poverty alleviation, employment creation, and the promotion of equality. What to note, this paper scientific suspect and expect the welfare and trade effects of the AfCFTA on Nigerian and South African sectors possessing sustained export potential in the AfCFTA member states. As a result, this paper confirms positive welfare gains for Nigeria (US$146.12 million) and South 529Africa (US$1.46 billion), originating from the GTAP sectors identified with sustainable 530 export opportunities within the AfCFTA member states. Overall, it is possible to register with some modifications as it is consistent with the Journal of Sustainability in terms of the purpose, direction, content, and contribution of the results of this paper.

 

2. Major issues

◉ Introduction section

The sufficient explanation and understanding of the background of the study are excellent, but there is a lack of reference to the purpose of the study and the impact and contribution of the empirical results obtained through this study. In particular, I hope to strengthen the purpose of the research by strengthening the specificity of the background of the publishing. For example, the African Free Trade Zone (AfCFTA), a regional free trade agreement covering the continent, takes effect on May 30, 2019, stressing that AfCFTA is the largest free trade zone in history in terms of population (1.2 billion) and member of states (52 countries).

 

◉ Methodology section

- re-structure the emperial strategy by dividing it into steps 1/2/3/4.

- Empirical strategy section could be included as below :

The combination of a billion people, impressive economic growth, a growing middle class, urbanization, and an increase of purchasing power has transformed Africa into a rising consumer market. I would like to emphasize that the most strategic investment opportunity, in the long run, lies in pursuing Africa’s middle-income class and not in resource development. Although the overall majority of Africans yet live in absolute poverty, the consumer market is growing as the urban population who have sufficient purchasing power continues to expand. For example, A growing number of large-scale shopping malls and supermarkets are moving into Africa’s major cities and they are being stockpiled with processed agricultural products, household goods, computers, household electronics, and many kinds of manufactured products. However, for Korea, the market remains difficult to access because Africa is not only geographically distant but also because poor physical and institutional trade infrastructure in Africa limits traditional export means.  So, this paper should be consider that contributing factors to Africa’s consumer market growth from economic and demographic perspectives while also outlining current consumption patterns, trends, and development of distribution channels. Although the middle-income group who have sufficient purchasing capacities remains small in size, it is growing at a fast pace around urban areas. Consequently, around two-thirds of African households are prospected to have certain discretionary income by 2025.   The key characteristics of the African consumer market from a supply and demand logic. Various media outlets and reports have highlighted the growing size of the African consumer market. However, looking at the size alone is a convenient and arbitrary way of viewing the African continent as a single market, which is far from the truth. In this chapter, we analyze the African market through an objective and empirical method. One main feature of the African consumer market is fragmentation where poor traffic networks limit the trade of goods, services and labor. Borders that surround landlocked countries also hinder trade with regional and international markets. Another feature of the African consumer market is the accelerating market penetration of Chinese goods. Cheap Chinese products can be found not only in urban areas but also in rural areas. The range of products covers a wide spectrum, including clothing, shoes, socks, plastics, agricultural machinery, household electronics, mobile phone, construction materials, stationery, and others. Moreover, due to the underdevelopment of manufacturing infrastructure, Africa depends heavily on imports of processed goods. Import dependency is over 30% for food and beverages while surpassing 60% for technology intensive goods such as cars and chemical products. 

 

3. Minor issues

◉ Specify the units of Total included in Table 2.
◉ Modify the notation of Scenario 1 and Scenario 2 as shown in No.1/No. 2 to help to understand, and in particular, please distinguish the section so that the Scenario is included in Table 4/5.

◉ Regarding the Conclusions and recommendations section, Although it was launched at a rapid pace under the leadership of the African Union (AU), many suggest additional negotiations, infrastructure investment expansion, and institutional reform, especially the lack of comparative advantage due to regional trade items, lack of trade, customs, and logistics infrastructure, and the expected chronic corruption and bureaucracy in the agreement implementation.

 

Author Response

The response to the reviewer is provided in the uploaded document.

Author Response File: Author Response.pdf

Reviewer 2 Report

The article is well developed in all its parts and the topic is current and of interest. It would be advisable that some of the issues contained in the conclusions be placed somewhat more fully developed in the discussion of the results. A separate section explaining limitations would also be interesting.

Minor issues:

-References are found in different formats, although this is not a problem since the journal then applies its own format.

-On line 300, the figure on the back page covers part of the text.

-On line 354 there are problems with the numbering of the equations, appearing overlapped with the text.

-In general, the distribution and formatting of all formulas and equations presented in the text should be revised.

Author Response

I uploaded the response to the reviewer.

Author Response File: Author Response.pdf

Reviewer 3 Report

The research article is substantive and within the scope of the journal. The paper is generally well-written and well-researched, though it would benefit from an extensive English language revision.

I have a number of comments/suggestions for the authors:

1)     This abstract is well-written and provides a comprehensive overview of the research conducted. I have a few suggestions for the authors. Firstly, they should include a more detailed explanation of the methods used in their research, such as how the Decision Support Model and Global Trade Analysis Project Computable General Equilibrium model were combined. Secondly, they should provide more specifics about the expected welfare and trade effects of the AfCFTA on Nigerian and South African sectors. Lastly, they should include a discussion of the implications of their findings for policymakers.

2)     There have been numerous research studies conducted on AfCFTA. Many of these studies focus on the potential economic benefits of the agreement, such as increased investment, expanded regional value chains, job creation, and poverty reduction. Other research has looked at issues such as how the AfCFTA will affect intra-African trade, how it can help African countries become more competitive globally, and what challenges need to be overcome for AfCFTA to be successful. So, in the study background section, you should say what new things you want to bring up here. Export competencies and the growth and consistency of the import demand are not enough justification for conducting this study.

3)     “In terms of the scholarly information within the public domain, this is the first time elements of a product-level export market analytical tool are harmonized with a CGE model in welfare and trade assessments.” This statement is incorrect, right? This is not the first one. Yes, I agree that there have been a few research studies utilizing a product-level export market analytical tool in the context of AfCFTA. One example of such research is a 2020 study conducted by the United Nations Conference on Trade and Development (UNCTAD), which utilized an applied general equilibrium model to analyze the potential impacts of AfCFTA on trade. The findings of this study are outlined in their publication, "AfCFTA: An Analysis of Product-Level Exports".

4)     The introduction is not compelling to justify why the research is warranted.

5)     The main limitations of the DSM and GTAP CGE model include the lack of flexibility in modeling both economic and non-economic factors, the difficulty of properly accounting for heterogeneity within countries, and the complexity of the model itself. So, how do you address this issue in your research?

6)     Some discussion points are missing. I would strongly recommend adding a separate discussion section with proper references to show the implication of this research in science, policy, and practices. So, adding a discussion section to this study could prove beneficial in highlighting the significance of the study's findings. You could include discussion points such as discussing the implications of the study's results in the context of the African Continental Free Trade Area (AfCFTA), and exploring how the AfCFTA could be improved based on the research presented. Additionally, you could also discuss areas for future research, as well as potential challenges posed by the AfCFTA, and how they could be addressed.

Some specific points you could include in the discussion section are:

·       Exploring different trade policies that could be implemented to maximize the potential benefits of the AfCFTA

·       Analyzing the effects of the AfCFTA on various industries at both the national and regional levels

·       Discussing the challenges faced by small and medium-sized enterprises when trading within the AfCFTA

·       Looking at further integration between countries in the AfCFTA in order to increase the economic benefits of the agreement

·       Considering methods to address any potential negative impacts of the AfCFTA.

 

7)     At reading the paper, I am left with the question of what was achieved.

8)     In conclusion, the following research questions should be addressed. (i) How does this research inform practice? (ii) How does this translate to implications for the stakeholders, and which particular stakeholders?

9)     The English writing needs to be substantially polished, better by an English native speaker.

 

Good Luck!

Author Response

I uploaded the response to the reviewer.

Author Response File: Author Response.pdf

Round 2

Reviewer 3 Report

Thank you for the opportunity to review this manuscript. After careful consideration of the manuscript and responses to my previous comments, I regret to inform you that I cannot recommend this manuscript for publication in its current form.

Although the authors have made some revisions and addressed some of the concerns I raised, there are still several significant issues that have not been adequately addressed. Specifically, study novelty (previous comment no. 2 & 3), clear justification (#4), methodological bias (#5), weak discussion points (#6), and lacking key conclusion (#8).

Based on these issues, I believe that the manuscript does not meet the standards required for publication in this journal. I strongly recommend that the authors address these concerns before resubmitting their manuscript. If the authors choose to revise and resubmit their manuscript, I would be happy to review it again.

 

Thank you again for the opportunity to review this manuscript.