Economic wide impact of WTO accession on Ethiopian Economy

This study examines the economy wide impact of WTO accession on Ethiopian Economy on Ethiopia. The analysis is made based on Ethiopian social accounting matrix (SAM) of 2005/06 constructed by EDRI. The study has utilized a recursive dynamic CGE model. The model is simulated for an import tariff reduction on different sectors using three different scenarios. Simulation results using a dynamic economy-wide framework indicates significant impacts of safeguard measures in terms of stimulating the domestic manufacturing sector if Ethiopia accedes to WTO. Despite the benefits obtained at aggregate level the sectoral effects of WTO have remained mixed. In particular the majority of domestic manufacturing activities tend to suffer from member forced Ethiopia to reduce the applied tariff by 5% due to increased competition from imports. A close look at this result implies that such adverse impacts of WTO accession may retard the realization of the joining WTO. In order to overcome and minimize the negative impacts of WTO accession an it is quite essential to design a temporary exit strategy such as introducing safeguard measures for the affected sectors.