Implications of avian flu for economic development in Kenya:

Kenya is vulnerable to avian flu given its position along migratory bird routes and proximity to other high-risk countries. This raises concerns about the effect an outbreak could have on economic development. We use a dynamic computable general equilibrium model of Kenya to simulate potential outbreaks of different severities, durations, and geographic spreads. Results indicate that even a severe outbreak does not greatly reduce economic growth. It does, however, significantly worsen poverty, because poultry is an important income source for poor farmers and a major food item in consumers' baskets. Avian flu therefore does pose a threat to future development in Kenya. Reducing the duration and geographic spread of an outbreak is found to substantially lower economic losses. However, losses are still incurred when poultry demand falls, even without a confirmed outbreak but only the threat of an outbreak. Our findings support monitoring poultry production and trade, responding rapidly to possible infections, and improving both farmers' and consumers' awareness of avian flu.Avian influenza Developing countries, avian flu, economic growth, Poverty, Computable General Equilibrium (CGE) model, Development strategies,

Can South Africa afford to become Africa's first welfare state?

"This paper assesses the economy-wide impact of implementing and financing a universal or basic income grant (BIG) in South Africa. The various financing scenarios suggested by the proponents of the grant are presented, and these are compared using an applied general equilibrium model for the South African economy. The results indicate that the required changes in direct and indirect tax rates needed to finance the grant without increasing the government deficit are substantially higher than currently predicted. Furthermore, the alternative of reducing government recurrent expenditure to finance the BIG will undoubtedly undermine other government policy objectives. The paper therefore proposes a shift in the current debate, away from determining which of the individual financing options is preferable, towards an acknowledgement that a 'balanced' approach is likely to provide the only feasible scenario. Furthermore, the impact of the grant on economic growth is found to hinge on its ability to enhance factor productivity. These results suggest that the possibility of South Africa becoming the continent's first welfare state is as likely to rest with the macroeconomic impacts of financing the grant, as with the ability of the grant to address the country's prevailing poverty." Author's Abstract.Macroeconomics ,

Has trade liberalization in South Africa affected men and women differently?:

"Trade liberalization is a central part of South Africa's post-Apartheid development strategy. However, despite considerable reforms, the country has failed to generate pro-poor growth, with both unemployment and inequality worsening over the last ten years. This has raised concern that trade liberalization may have worked against the country's development objectives. This study uses a dynamic general equilibrium and microsimulation model to assess the effects of trade liberalization on growth, employment and poverty in South Africa. More specifically, it examines how men and women have been affected differently and whether liberalization has contributed to the faster rise in female unemployment and poverty. The results suggest that trade policies have not contributed to increased poverty and that trade-induced technological change has accelerated growth. However, liberalization has changed the sectoral structure of production and has exacerbated income inequality. While male and female workers have benefited from trade-induced growth, it is male-headed households who have benefited more from rising factor incomes. Trade reforms have however contributed to the observed decline in the gender wage gap, but this has been driven by rising employment amongst higher-skilled female workers. As such, the decline in poverty amongst female-headed households has remained small. While further liberalization may increase growth and reduce poverty, it is men and male-headed households who are more likely to benefit. These findings suggest that, while there is no trade-off between trade reform and poverty reduction, the country should not rely on further liberalization to generate pro-poor growth or address the prevailing inequalities between different population groups, such as men and women." Author's Abstracttrade liberalization, Inequality, Unemployment, General equilibrium model, Microsimulation model, Poverty, Gender issues, Female labor, Income inequality, Trade reform, Pro-poor growth,

Can South Africa afford to become Africa's first welfare state?

"This paper assesses the economy-wide impact of implementing and financing a universal or basic income grant (BIG) in South Africa. The various financing scenarios suggested by the proponents of the grant are presented, and these are compared using an applied general equilibrium model for the South African economy. The results indicate that the required changes in direct and indirect tax rates needed to finance the grant without increasing the government deficit are substantially higher than currently predicted. Furthermore, the alternative of reducing government recurrent expenditure to finance the BIG will undoubtedly undermine other government policy objectives. The paper therefore proposes a shift in the current debate, away from determining which of the individual financing options is preferable, towards an acknowledgement that a 'balanced' approach is likely to provide the only feasible scenario. Furthermore, the impact of the grant on economic growth is found to hinge on its ability to enhance factor productivity. These results suggest that the possibility of South Africa becoming the continent's first welfare state is as likely to rest with the macroeconomic impacts of financing the grant, as with the ability of the grant to address the country's prevailing poverty." Author's Abstract.Macroeconomics ,

Agricultural growth, poverty, and nutrition in Tanzania:

Rapid economic growth has failed to significantly improve poverty and nutrition outcomes in Tanzania. This raises concerns over a decoupling of growth, poverty, and nutrition. We link recent production trends to household incomes using a regionalized, dynamic computable general equilibrium and microsimulation model. Results indicate that the structure of economic growth—not the level—is currently constraining the rate of poverty reduction in Tanzania. Most importantly, agricultural growth trends have been driven by larger-scale farmers and by crops grown in only a few regions of the country. The slow expansion of food crops and livestock also explains the weak relationship between agricultural growth and nutrition outcomes. Additional model simulations find that accelerating agricultural growth, particularly in maize, greatly strengthens the growth–poverty relationship and enhances households' caloric availability. We conclude that low productivity, market constraints (including downstream agroprocessing), and barriers to import substitution for major food crops are among the more binding constraints to reducing poverty and improving nutrition in Tanzania.economic growth, Poverty, Nutrition, household incomes, Computable general equilibrium (CGE) modeling, Agricultural growth, Microsimulation model, livestock, Food crops, low productivity, market constraints, Development strategies,

Agricultural Distortions, Poverty and Inequality in South Africa

South Africa has rapidly reduced trade barriers since the end of Apartheid, yet agricultural production and exports have remained sluggish. Also, poverty and unemployment have risen and become increasingly concentrated in rural areas. This paper examines the extent to which remaining price distortions, both domestic and foreign, are contributing to the underperformance of the agricultural sector vis-à-vis the rest of the economy. We draw on a computable general equilibrium (CGE) and micro-simulation model of South Africa that are linked to the results of a global trade model. This framework is used to examine the effects of eliminating global and domestic price distortions. Model results indicate that South Africa’s agricultural sector currently benefits from global price distortions, and that removing these would create more jobs for lower-skilled workers, thereby reducing income inequality and poverty. We also find that South Africa’s own policies are biased against agriculture and that removing domestic distortions would raise agricultural production. Job losses in nonagricultural sectors would be outweighed by job creation in agriculture, such that overall employment rises and poverty falls. Overall, our findings suggest that South Africa’s own policies are more damaging to its welfare, poverty and inequality than distortionary policies in the rest of the world. Existing national price distortions may thus explain some of the poor performance of South Africa’s agricultural sector and rural development.Distorted incentives, agricultural and trade policy reforms, national agricultural development, Agricultural and Food Policy, International Relations/Trade, F13, F14, Q17, Q18,

Poverty-focused social accounting matrices for Tanzania

The development of effective and sustainable economic policies for Tanzania requires access to appropriate databases. One such database is a social accounting matrix (SAM) that details the structure of the entire economy, taking into account the patterns of production and demand, and various institutional relationships. Prior to this study the most recent SAM for mainland Tanzania was for 1992 and was based on past household budget and labor force surveys. Following the release of newer versions of these two surveys as well as a new input-output table for 1992, it is desirable to construct a new SAM for the country. Furthermore, given that Tanzania is committed to reducing national poverty, it is necessary that this new SAM is able to address questions related to poverty and inequality.Social accounting Tanzania ,Poverty alleviation ,economic policies ,

Formal-informal economy linkages and unemployment in South Africa:

South Africa's high involuntary unemployment and small informal sector are attributed to an underperforming formal sector and barriers to entry in the informal sector. This paper examines the economywide linkages between the formal and informal economies while accounting for different types of informal activities. A multiregion empirically calibrated general equilibrium model is developed capturing both product and labor markets. Three policy options are considered. First, results indicate that trade liberalization reduces national employment. At the same time, it increases formal employment, hurts informal producers, and favors informal traders, who benefit from lower import prices. Past liberalization may, therefore, partly explain South Africa's small informal sector and its concentration among traders rather than producers. Second, wage subsidies on low-skilled formal workers increase national employment but hurt informal producers by heightening competition in domestic product markets. This suggests that it is insufficient to examine unemployment policies by focusing only on labor markets. Third, unconditional cash transfers stimulate demand for informally produced products, thereby raising informal employment without undermining formal producers. The transfer does, however, place a large fiscal burden on the state and is less effective at reducing national unemployment than a wage subsidy. Overall, these findings underline the importance of distinguishing between the formal and informal sector implications of socioeconomic policies.informal economy, involuntary unemployment, formal economy, labor markets, trade liberalization, national employment, Cash transfers, wage subsidy, Computable general equilibrium (CGE) modeling, Development strategies,

The road to pro-poor growth in Zambia

"Zambia is one of the poorest countries in Sub-Saharan Africa. Almost three-quarters of the population were considered poor at the start of the 1990s, with a vast majority of these people concentrated in rural and remote areas. This extreme poverty arose in spite of Zambia's seemingly promising prospects following independence. To better understand the failure of growth and poverty-reduction this paper first considers the relationship between the structure of growth and Zambia's evolving political economy. A strong urban-bias has shaped the country's growth path leading to an economy both artificially and unsustainably distorted in favor of manufacturing and mining at the expense of rural areas. For agriculture it was the maize-bias of public policies that undermined export and growth potential within this sector....Sustained investment and economic growth during recent years suggest a possible change of fortune for Zambia. In light of this renewed growth, the paper uses a dynamic and spatially-disaggregated economy-wide model linked to a household survey to examine the potential for future poverty-reduction....Although agricultural growth is essential for substantial poverty-reduction, the country's large poor urban population necessitates growth in non-agriculture. The findings suggest that returning to a copper-led growth path is not pro-poor and that non-mining urban growth, although undermined by foreign exchange shortages and inadequate private investment, is likely to be preferable for reducing poverty." Authors' AbstractCopper mines and mining ,Poverty alleviation Africa Zambia ,Manufacturing industries ,Spatial analysis (Statistics) ,Household surveys ,

Inequality and Poverty Impacts of Trade Distortions in Mozambique

Although Mozambique has considerable agricultural potential, rural poverty remains extremely high. This paper examines the extent to which global and domestic price distortions affect agricultural production and national poverty. We develop a computable general equilibrium (CGE) and micro-simulation model of Mozambique that is linked to the results of a global model. This framework is used to examine the effects of eliminating global and national price distortions. Model results indicate that agriculture is adversely affected by current trade distortions due to policies in the rest of the world. While a removal of all merchandise trade distortions would reduce import prices, it would also raise agricultural production and reduce poverty. By contrast, removing only agricultural price distortions abroad would have little effect on Mozambique’s agricultural sector. Model results indicate that Mozambique’s own distortions are also biased against agriculture, with producers of processed agricultural products enjoying high protection levels. Removing these distortions causes a significant expansion of agricultural GDP and a reduction in both poverty and inequality. Our findings therefore suggest that removing own-country and rest-of-world distortions would have positive implications for agriculture and for the overall economy in Mozambique, and in particular it would reduce its poverty and inequality.Distorted incentives, agricultural and trade policy reforms, national agricultural development, Agricultural and Food Policy, International Relations/Trade, F13, F14, Q17, Q18,