Computable General Equilibrium Micro-Simulation Analysis of the Impact of Trade Policies on Poverty in Zimbabwe

The paper uses a micro-simulation computable general equilibrium (CGE) model to study the impact on poverty of trade liberalisation in Zimbabwe. The model incorporates 14006 households derived from the 1995 Poverty Assessment Study Survey (PASS). The novelty of this paper is that it is one among a small group of papers that incorporates individual households in the CGE model as opposed to having representative households, allowing for a comprehensive analysis of poverty. The complete removal of tariffs favours export-oriented sectors and all imports increase. Poverty falls in the economy while inequality hardly changes. The results differ between rural and urban areas.Computable General Equilibrium, Trade Liberalisation, Micro-simulation, Poverty, Inequality

A Computable General Equilibrium Micro-Simulation Analysis of the Impact of Trade Policies on Poverty in Zimbabwe

The paper uses a micro-simulation computable general equilibrium (CGE) model to study the impact on poverty of a complete removal of tariffs in Zimbabwe. The model incorporates 14006 households derived from the 1995 Poverty Assessment Study Survey. This paper’s novelty is that it is one among a small group of papers that incorporates individual households in the CGE model as opposed to having representative households. Using individual households allows for a comprehensive analysis of poverty. The complete removal of tariffs favours exporting sectors. Poverty falls in the economy while inequality hardly changes. The results differ between rural and urban areas.Computable General Equilibrium, Trade Liberalisation, Micro-simulation, Poverty, Inequality

Working Paper 95 - Agricultural Trade Policy Reform in South Africa

This paper empirically investigates the impact of agricultural trade reform in South Africa. Using UNCTAD’s Agricultural Trade Policy Simulation Model (ATPSM), the study performs two specific scenarios that capture the magnitude of (i) the economic impact of global agricultural trade reform in South Africa and (ii) the economic impact if the reform in South Africa is coupled with agricultural reforms in the European Union (EU). Trade reform focuses on substantial tariffs reduction, although in the case of the EU scenarios also include reduction in domestic support and export subsidies. The results show that unilateral tariff reduction in the selected number of agricultural products amounts to welfare gains of US$21 million. These gains are three times higher when accompanied by extensive reforms in the EU.

Working Paper 109 - The First Africa Region Review for EAC/COMESA

The main objective of this paper is to present a mapping of trade-relatedbottlenecks in the EAC/COMESA region to eligible aid-for-trade (AFT)categories, and to articulate a strategy for mobilising significant amounts of aidfor trade. To do so, the paper reviews the constraints to trade in EAC/COMESA.It identifies existing AFT-related programmes and activities, and documents thestatus of their implementation, pointing out any gaps and the causes thereof.The paper is based on the premise that the EAC/COMESA region faces uniqueand severe constraints to trade related to the fact that many of the memberstates are land-locked. This, combined with poor infrastructure and services,cumbersome border procedures, inadequate mainstreaming of trade in nationaldevelopment strategies, and lack of progress in deepening economic integration,explains the region’s dismal trade performance, both intra-regionally andexternally. AEC/COMESA is aware of these constraints. The region haslaunched various initiatives to tackle them. The majority of these initiatives relateto trade facilitation measures.The North-South Corridor is one trade-related infrastructure project that hasattracted attention in the region, both by virtue of its scale and purported benefits.Even though the implementation of the project was slow initially, the politicalimpetus during the North-South Corridor High Level meeting in Lusaka, Zambiain April 2009 attracted financing in the region of US$1.2 billion. As the first pilot inEast Africa, the North-South Corridor clearly shows that Aid for trade can play akey role in sustaining ongoing efforts to overcome bottlenecks to trade.The key message is that an effective AFT strategy should focus primarily ontrade facilitation, with some emphasis on trade-related infrastructure. Sincesubstantial aid has traditionally been directed to technical assistance andcapacity building, and the trend is likely to continue, there is no need to build thiselement into the strategy per se. Such a strategy must: (a) Emphasise thecontribution of trade facilitation measures in reducing trade costs and enhancingexport competitiveness; (b) demonstrate the added benefits of modern traderelatedinfrastructure; (c) demonstrate the political will by the EAC/COMESAmember states to address the region’s constraints in the spirit of cooperation andsolidarity to landlocked neighbours; and (d) impress on the donor community theneed for greater AFT resources to help the region participate fully in global tradeand attain the MDGs.The Aid for Trade agenda should also highlight the importance of monitoring toshow its impact on trade and development. In this case, the EAC/COMESAregion should maintain a database of Aid for Trade for monitoring and evaluationpurposes.

THE URUGUAY ROUND AGREEMENT ON AGRICULTURE: A REVIEW OF PROGRESS AND CHALLENGES IN THE SADC REGION

Through the Uruguay Round Agreement on Agriculture (URAA), the multilateral trade negotiations saw a turning point in the inclusion of agriculture in the trade liberalization debate. This development bears important implications for developing countries, including those of SADC, who have agricultural as a critical element of their economic growth, poverty alleviation, and food security. This article reviews the progress of SADC countries towards implementation of the URAA. We find that the extent of SADC countries support to the agricultural sector is still within the URAA provisions. However, despite certain preferential trade agreements in place between SADC and the developed world, trade barriers are still high in many developed countries. A barrier-free access to developed country markets has important growth and poverty alleviation implications for SADC countries.International Relations/Trade,

Institutional quality, openness, and investment in Africa

This study supports the conventional wisdom that openness to trade is good for investment and economic growth. Whether this conclusion leaves space for institutional quality as a complimentary policy to determine the success of trade liberalization in Africa is the objective of this paper. The theoretical model and empirical analysis show how the behavior of government bureaucrats can be used to explain the impact on investment of the interaction between increased openness to trade and the quality of institutions. Empirical work is conducted using panel data observed over three periods: 1985-1990, 1990-1995, and 1995- 2000

Agricultural exports : important issues for Sub-Saharan Africa

The central argument of this paper is that African countries stand to benefit more from the goodwill currently being shown by industrialized countries who have committed themselves to further opening up of their markets for commodities from the region. However, more needs to be done by African governments and the international community if these benefits are to trickle down to the African farmers and result in attaining the goal of poverty reduction. This paper identifies the issues that need to be addressed by all parties involved. At the macro level, our results find that the distortion in the macro environment is a major factor hindering African exports. At the micro level, our results show that for farmers to benefit from the opening up of the international market, they would need more access to market information, easier road access to the markets for both their output and inputs, improve their farming techniques by utilizing modern scientific farming methods and inputs, and to increase their productivity. At the international level, our study finds strong results indicating that foreign tariff rate, price support (PNAC) and standards act as a market barrier to African agricultural exports

Trade openness and foreign direct investment in Africa

Africa's share of foreign direct investment (FDI) has lagged behind other regions in the world, despite a sharp increase in FDI inflows to the region in 2001. Factors contributing to this circumstance include perceptions of high corruption, weak governance and poor infrastructure. The motivation of this paper is to investigate the impact of openness to trade on the FDI inflow to Africa. In addition to economy-wide trade openness, we also analyse the impact on FDI of openness in manufactured goods, primary commodities and services. The empirical work uses cross-country data from selected African countries observed over four periods: 1980-1985, 1985-1990, 1990-1995 and 1995-2001. We find that the FDI to GDP ratio responds well to increased openness in the whole economy and in the services sector in particular