THE STATIC WELFARE ECONOMICS OF A SMALL DEVELOPING-COUNTRY MEMBERSHIP IN A CUSTOMS UNION - BOTSWANA IN THE SOUTHERN AFRICAN CUSTOMS UNION

This paper sets out the comparative static welfare economic methodology for evaluation of the gain or loss due to a small country's membership in an existing customs union (in contrast with the usual case of an outsider considering joining a customs union). It then reports the application of this methodology to the case of Botswana's membership in the Southern African Customs Union, using highly disaggregated data to calculate the components of the welfare changes and the net welfare benefit or cost for four recent years. The result is a net cost to Botswana of up to 3.25% of GDP.