WELFARE EFFECTS FROM REFORMING AGRICULTURAL POLICIES IN RICH COUNTRIES IN A SPATIALLY SMALL HETEROGENEOUS AGRICULTURAL ECONOMY

Import barriers and subsidies to agriculture sectors in rich countries have favored their farmers at the cost of depressing the economies of developing countries, reducing national welfare, hampering agricultural trade and economic growth, and worsening inequality and poverty. The impact of agricultural policies in rich countries has been extensively analyzed. Less studied are their spatial implications in a small open economy. This paper analyzes the effects of reforming agricultural policies of rich countries on the welfare and income distribution in Tunisia. The analysis is based on a spatial dynamic computable general equilibrium (SD-CGE) model that captures the economies of four Tunisian sub-regions. Simulations suggest a relatively small impact at the macroeconomic level, but significant impacts are felt on the regional economies and income distributions.Multilateral agricultural trade liberalization, developing countries, income distribution, impact analysis, spatial analysis