HIV/AIDS, human capital, and economic prospects for Mozambique

As in other countries in the southern Africa region, a human development catastrophe is unfolding in Mozambique. Recently released data estimate HIV prevalence rates amongst the adult population in the year 2000 at around 12% with substantial regional variation..... This paper is structured as follows. Section two discusses the implications of recently released HIV prevalence rates and provides more detail on the expected demographic impacts of the pandemic using available demographic projections. Section three reviews literature focusing on macroeconomic impacts. Section four formally analyzes implications for human capital accumulation. Section five presents the economy-wide modeling approach including critical assumptions and model scenarios. Section six discusses the major results. Section seven summarizes and section eight considers both reactive and preventive policy implications.....[The paper concludes that] the economic analysis and related policy implications provide strong support for adoption of both reactive and preventive policies. While the pandemic cannot be avoided, much can be done to reduce its harshness and duration. Some relatively broad policy options were also presented; however, as usual, the devils are in the details. Moving beyond these general policy ideas (both reactive and preventive) to real policy initiatives will require careful thought particularly with respect to issues of implementation.Human capital ,

DEMAND FOR HERBICIDE IN CORN: AN ENTROPY APPROACH USING MICRO-LEVEL DATA

Price responsiveness of herbicide demand in corn for farmers in Indiana'Â’s White River Basin using cross-section data from individual farms is estimated. Particular attention is paid to appropriate treatment of binding nonnegativity constraints. Estimation was first attempted using an approach to demand systems estimation suggested by Lee and Pitt. However, analytical and computational difficulties effectively preclude estimation by the Lee and Pitt approach. As an alternative, a maximum entropy (ME) approach is presented and discussed. Results from the ME estimator tentatively indicate limited response of herbicide demand to changes in own prices. The maximum entropy approach to demand systems estimation appears to have merit and warrants further attention.Crop Production/Industries, Demand and Price Analysis,

The Doha Trade Round and Mozambique

This paper considers the potential implications of the Doha Development Agenda, as well as other trade liberalization scenarios, for Mozambique. An applied general equilibrium model, which accounts for high marketing margins and home consumption in the Mozambique economy, is linked to results from the GTAP model of global trade. In addition, a microsimulation module is used to consider the subsequent implications of trade liberalization for poverty. The implications of trade liberalization, particularly the Doha scenarios, are found to be relatively small. Presuming that a more liberal trading regime will positively influence growth in Mozambique, an opportunity exists to put in place such a regime without imposing significant adjustment costs.Environmental Economics&Policies,Economic Theory&Research,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Consumption,Access to Markets

On Trade Policy Reform and the Missing Revenue: an Application to Mozambique

In many developing countries, large discrepancies exist between revenues implied by published tariff rates multiplied by estimated import volumes and actual receipts. We develop a stylized trade model where average and marginal tariff rates diverge and incorporate insights from this model into a computable general equilibrium model of Mozambique to study the implications of trade policy reform. Model simulations indicate that lowering tariff rates and reducing duty free importation in a manner that maintains official revenue benefits nearly everyone with the main exception being those, who benefited from duty free imports in the base.trade policy; public revenue; Mozambique

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,

HIV/AIDS and Primary School Performance in Tanzania

We examine the performance of the primary school education system in Tanzania over the 1990sa decade characterized by substantial AIDS deaths. Given the relatively robust correlation between educational attainment and productivity established in the literature in both agricultural and non-agricultural sectors, human capital accumulation through education forms a major component of development strategy. At the same time, AIDS poses clear threats to the goal of human capital accumulation through education. To assess performance of the primary school system, we estimate non-stationary education transition matrices using a minimum cross entropy approach at the national, sub-national, and regional levels for girls, boys, and all students. Results indicate a deterioration in primary school performance using enrollments in grade 7, the final year of primary school, as a metric. This deterioration in performance occurred despite increased real resource allocations to the public education system and positive, if only tepid, overall economic growth trends. We conclude that the HIV/AIDS pandemic has quite likely slowed human capital accumulation in Tanzania.Health Economics and Policy, Labor and Human Capital,

Estimating utility-consistent poverty lines

"With the focus of international development resources increasingly turned toward poverty reduction, the demand for reliable empirical estimates of poverty levels has grown dramatically... This paper contributes to the poverty measurement literature by introducing an information theoretic approach to assuring the utility consistency of poverty lines. Even though the philosophical roots of information theory and the links between information theory and other estimation criteria fill volumes, the actual practical application of the approach is quite straightforward." From TextPoverty lines ,Poverty alleviation ,Development projects Evaluation ,measurement ,Entropy estimation ,

Poverty comparisons with absolute poverty lines estimated from survey data

"The objective of measuring poverty is usually to make comparisons over time or between two or more groups. Common statistical inference methods are used to determine whether an apparent difference in measured poverty is statistically significant. Studies of relative poverty have long recognized that when the poverty line is calculated from sample survey data, both the variance of the poverty line and the variance of the welfare metric contribute to the variance of the poverty estimate. In contrast, studies using absolute poverty lines have ignored the poverty line variance, even when the poverty lines are estimated from sample survey data. Including the poverty line variance could either reduce or increase the precision of poverty estimates, depending on the specific characteristics of the data. This paper presents a general procedure for estimating the standard error of poverty measures when the poverty line is estimated from survey data. Based on bootstrap methods, the approach can be used for a wide range of poverty measures and methods for estimating poverty lines. The method is applied to recent household survey data from Mozambique. When the sampling variance of the poverty line is taken into account, the estimated standard errors of Foster-Greer- Thorbecke and Watts poverty measures increase by 15 to 30 percent at the national level, with considerable variability at lower levels of aggregation." -- Authors' AbstractPoverty measurement, Surveys -- Statistical methods, Household surveys, Poverty lines

Poverty Comparisons with Endogenous Absolute Poverty Lines

The objective of measuring poverty is usually to make comparisons over time or between two or more groups. Comm on statistical inference methods are used to determine whether an apparent difference in measured poverty is statistically significant. Studies of relative poverty have long recognized that when the poverty line is calculated from sample survey data, both the variance of the poverty line and the variance of the welfare metric contribute to the variance of the poverty estimate. In contrast, studies using absolute poverty lines have ignored the poverty line variance, even when the poverty lines are estimated from sample survey data. Including the poverty line variance could either reduce or increase the precision of poverty estimates, depending on the s pecific characteristics of the data. This paper presents a general procedure for estimating the standard error of poverty measures when th e poverty line is estimated from survey data. Based on bootstrap methods, the approach can be used for a wide range of poverty measures and methods for estimating poverty lines. The method is applied to recent household survey data from Mozambique. When the sampling variance of the poverty line is taken into account, the estimated standard errors of the headcount and the poverty gap at the national level increase by 27 and 29 percent respectively.poverty measurement, bootstrap, Mozambique, Food Security and Poverty, I32, C13, 012,

Trade Reform and Gender in Mozambique

This paper uses an economywide model to study the impact of trade policy reform on male and female labor in Mozambique. The model disaggregates factor markets by skill and gender, and incorporates links between trade reform, product prices and wages by gender. The model also includes a detailed treatment of production technology and import protection, and is linked to a top-down microsimulation model of households. We find that trade policy has only a modest effect on gender wage differentials, and conclude that policy concerns with gender imbalances should focus on skill upgrading and sectoral mobility rather than on trade policy.