Regulatory spillovers as public goods: Non-tariff measures and the efficiency–industrialization tension in the AfCFTA

Abstract

Using the MAGNET recursive-dynamic CGE model, we quantify AfCFTA non-tariff measure (NTM) reforms. We advance the methodology by modeling regulatory spillovers as public goods, deviating from standard Vinerian assumptions. Results indicate spillovers generate welfare gains up to 16 times larger than tariff cuts. However, a structural tradeoff emerges: while maximizing aggregate efficiency, spillovers risk crowding out domestic manufacturing by reinforcing comparative advantages in primary commodities. This disproportionately benefits resource-rich economies and threatens broader continental industrialization goals. We conclude that successful integration requires strategic sequencing of input harmonization and targeted adjustment funds to counteract these de-industrialization risks and manage the efficiency-industrialization tension.