Answer to Question #96488 in Microeconomics for pfunzo mmatshela

Question #96488
Use the relevant trade theories of comparative advantage to describe and discuss the potential benefits and losses of cocoa production sectors in West African countries, like Ghana, when the signed Africa Free Trade Area Agreement (summarised in the attachments) is implemented from year 2020.
From both the potentially exporting (e.g. Ivory Coast) and importing country (e.g. RSA) perspectives, of these products, discuss with graphical illustrations the potential economic implications on variables including consumers, producers and governments stemming from a widening of African markets for cocoa products as a result of this FTA’s implementation. To support your discussion use the relevant economic data from sources (e.g. and others of trade data)
Expert's answer

the trade theory states that countries should specialize in the production of those goods they produce most efficiently and buy goods that produce less efficiently and buy goods that produce less efficiently from other countries according to this theory western countries which produce cocoa from export them they have to produce more so that free trade in the region would grow in term of economy due to this theory there are some benefits which could be attained they are as follows;

  • it has advanced the economy of Ghana in a percentage of 5.7 following a 6.7 percent growth in the previous period.
  • it has led to amid sharp contractions in construction ,water supply and electricity in the region.

though it has some losses such as;

  • it has led to slow growth of financial services by a decrease of 1.60 from 6.67 percent thus some farmers get affected when the financial services are less.

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