Trade Liberalization and Poverty: A Macro-Micro Analysis in Ethiopia

Using a CGE model, this study analyses the impact of trade liberalization on poverty at the household level taking Ethiopia as a case. Two scenarios (complete tariff cut and uniform tariff scheme) suggest that further liberalization of trade has little short-run effect on the overall economy. However, the agriculture-based manufacturing sector (in particular, textile and leather) is likely to be strongly affected by further tariff reduction. Reductions in import prices of textiles and leather products increase imports of these goods implying that trade liberalization is likely to dampen domestic production of textile and leather products. Poverty shows a slight increase in both scenarios. At the national level, a complete tariff cut results in an increase in poverty by 2.8 percent, while a uniform tariff scheme raises poverty by 2.3 percent. Similarly, it is found that poverty gap and poverty severity indices show a slight increase. Comparing the effect of trade reform on different household groups, i.e. farm households, wage earner households and entrepreneur households, poverty in entrepreneur households increases by a higher percentage change (3.2 percent) in the complete tariff cut scenario. Poverty incidence increases by 1.7 and 1.5 percent for farm households and wage earners, respectively, under the complete tariff cut scenario. This comparison holds consistently when looking at the more realistic uniform tariff scheme. Entrepreneur households are at a disadvantage due to trade liberalization shown in the poverty gap and poverty severity indices. This is consistent with the theoretical argument that previously protected infant industries are highly affected by trade liberalization. --trade liberalization,poverty,CGE,import duties,macro-micro simulation

Performance Indicators of Investment and Business Environment (ICBE) Improvement in Private Higher Education (PHE) and Private Health Service Provision in Addis Abeba in the Post 1991 Period

Driven by the restructuring of the world economy with massive incremental output and demand in Asia by China and India in particular, in the last seven years or so, the Ethiopian economy has been experiencing a remarkable average growth rate of 10%.

Trade Liberalization and Poverty: A Macro-Micro Analysis in Ethiopia

Using a CGE model, this study analyses the impact of trade liberalization on poverty at the household level taking Ethiopia as a case. Two scenarios (complete tariff cut and uniform tariff scheme) suggest that further liberalization of trade has little short-run effect on the overall economy. However, the agriculture-based manufacturing sector (in particular, textile and leather) is likely to be strongly affected by further tariff reduction. Reductions in import prices of textiles and leather products increase imports of these goods implying that trade liberalization is likely to dampen domestic production of textile and leather products. Poverty shows a slight increase in both scenarios. At the national level, a complete tariff cut results in an increase in poverty by 2.8 percent, while a uniform tariff scheme raises poverty by 2.3 percent. Similarly, it is found that poverty gap and poverty severity indices show a slight increase. Comparing the effect of trade reform on different household groups, i.e. farm households, wage earner households and entrepreneur households, poverty in entrepreneur households increases by a higher percentage change (3.2 percent) in the complete tariff cut scenario. Poverty incidence increases by 1.7 and 1.5 percent for farm households and wage earners, respectively, under the complete tariff cut scenario. This comparison holds consistently when looking at the more realistic uniform tariff scheme. Entrepreneur households are at a disadvantage due to trade liberalization shown in the poverty gap and poverty severity indices. This is consistent with the theoretical argument that previously protected infant industries are highly affected by trade liberalization

Performance indicators of Icbe in private higher education and health in Addis Abeba in the post 1991 period

This article is about institutional development around Investment Climate and the Business Environment [ICBE] in the establishment and growth of segments of the vital two social services ‐ private higher education [PHE] and private health, in Addis Abeba, Ethiopia in the post 1991 period. ICBE encompasses aspects of institutions as they relate specifically to the start up, growth, development and performance or otherwise of businesses and their capacity to drive the pace of economic and social progress.While the broad objective of the study has been to gauge progress in this arena and compare levels and directions of development, the specific objectives of the study was to develop parameters of performance indicators, gauge the on‐going process as perceived by the market participants, derive issues for further fine tunings of ICBE, policy and serve as a baseline for further study.To meet the objectives of shedding light on the on‐going ICBE process, apart from desk research, the Data Collection Team interviewed 424 respondents including the managers and staff of private higher education [PHE] and private health service providers, the direct beneficiaries of the social services [employers, current students, graduate alumni and patients], the indirect beneficiaries [staff and parents] and the regulatory authorities [education and health bureaus of the City Government of Addis Abeba].Partly as a result of improved ICBE, noticeable positive changes in governance, expansion in private higher education [PHE] and private health provision, efficiency gains, more effectiveness in the physical and social infrastructure are reported. Moreover, there are trends towards improved regional & gender equity, accountability in PHE and health delivery services, some levels of innovativeness and development and sustainability. Notwithstanding these, the absolute quality and standard of education and health provision leave a lot to be desired. The noticeable achievements have been attained with some challenges which need to be addressed in the forthcoming fine tuning of ICBE improvement policies and institutional engineering.Genuine and effective partnership between Government, the private sector and employers need to be remodeled with a certain level of autonomy for each. Government needs autonomy to ensure that its social goals are not entirely subsumed by the profit objectives of PHE and private health firms. The latter require autonomy to tailor their services in order to meet the specific demand of the market. The ultimate beneficiaries of the process, employers and students can enrich the institutional packaging through bringing in their up to date need in the state of the art and the content of education.Ethiopian Journal of Economics vol 20 (1) 201

Using digital repeat photography to strengthen seasonal monitoring in Ethiopia’s R4 Rural Resilience Initiative

This paper discusses the feasibility of applying a near-surface remote sensing approach in the index insurance component of the R4 Rural Resilience Initiative in Ethiopia. Specifically, we test a prototype for using smartphone images of insured fields (or ‘picture-based insurance’) to monitor crops and manage basis risk in R4 insurance policies. We find that the proposed prototype, in which R4 agents send in images of crops grown by farmers in their communities, is feasible. Further, we find that crop losses are not only caused by droughts, which are covered by R4 index insurance products, but also by other perils such as pests or disease, which are not easily captured by index insurance. Despite limited smartphone penetration and current challenges in internet coverage, the near-surface remote sensing approach appears valuable and feasible in the context of the R4 Rural Resilience Initiative in Ethiopia

TH2.3: Smallholder Farmers Willingness to Pay for Crop Insurance Among Women and Men in Kenya

Because of increased incidences of drought due to climate change, it is vital that both men and women farmers can manage production risks. Agricultural insurance has been widely promoted to cushion farmers against adverse weather events, yet its uptake remains low, even more so among women. We therefore elicited incentivized measures of willingness to pay (WTP) for various agricultural insurance bundles offered to smallholder farmers within 7 counties in Kenya and analyze how WTP for the various bundles differs between women and men, and how it correlates with the Project-level Women's Empowerment in Agriculture Index (Pro-WEAI). We find that WTP is highest when the insurance product makes payouts in respondents' personal mobile money account, with significantly lower WTP when paid into their spouse's account, or into their savings group (ROSCA)'s account. This is consistent with the finding that control over use of income and autonomy in decision making are two of the main contributors to both men's and women's disempowerment. In conclusion, one of the ways to ensure that agricultural insurance supports women's empowerment is to ensure that insurance contracts purchased by women are registered under their names and payouts are subsequently paid to their accounts, so that they gain control over the use of income from insurance payouts

Crop commercialization in Ethiopia: Trends, drivers, and impact on well-being

Agricultural transformation refers to a series of changes in agriculture that both reflect and drive rising income and economic development more broadly. While the macroeconomic patterns of agricultural transformation are relatively well documented, less is known about how it is manifested at the household level. Ethiopia makes an excellent case study as it has had one of the fastest growing economies in the world. An important aspect of this process is agricultural commercialization, that is, the rising share of agricultural output is sold on the market rather than being consumed at home. Agricultural commercialization tends to rise with development with improved infrastructure and communications, the availability of inputs and know-how regarding commercial crop production, and farmers being willing to accept the risks associated with producing crops for the market. Agricultural commercialization is widely believed to allow farmers to earn higher income as they specialize in crops for which they have a comparative advantage. The analysis makes use of a data from three rural household surveys carried out in Ethiopia by IFPRI in 2012, 2016, and 2019. Each survey used a sample that was representative of the four main agricultural regions of the country (Tigre, Oromia, Amhara, and SNNP) with sample sizes of 3000 to 5000, including 1,900 households that were interviewed in all three rounds. In addition, we incorporate several weather variables based on CHIRPS rainfall data to estimate the effect of the level and variability of rainfall on agricultural commercialization

Climate-smart crop insurance to promote adoption of stress-tolerant seeds : midterm findings from a cluster randomized trial

Too often, smallholder farmers suffer severe financial consequences from extreme weather events, pests, and disease; and climate change will increase the frequency at which natural hazards occur. This project note describes the findings from a research program in Kenya that aims to design, implement, and evaluate more complete risk management solutions; in particular, a solution that promotes stress-tolerant crops and varieties using an innovative picture-based crop insurance (PBI) product. The note first describes this intervention and the study designed to measure its impacts, followed by an overview of key findings at midline. This will include insights on the scalability of picture-based claims settlement, opportunities for more gender-responsive program design, and demand for the insurance product. We conclude by describing key challenges faced whilst implementing these solutions and providing an outlook for the future.Dutch Research Council (NWO-WOTRO)Cultivate Africa’s Future Phase IICGIAR research programs for Policies, Institutions and Markets (PIM

Russia-Ukraine war and the global crisis: Impacts on poverty and food security in developing countries

Global food, fuel, and fertilizer prices have risen rapidly in recent months, driven in large part by the fallout from the ongoing war in Ukraine and the sanctions imposed on Russia. Other factors, such as export bans in response to concerns about commodity shortages, have also contributed to rising prices. Figure 1 examines price changes in key food and nonfood commodities between June 2021 and June 2022. The period of interest for this study is June 2021 to April 2022. Over this period, palm oil and wheat prices increased by 68 and 113 percent in nominal terms, respectively. When deflated by the US Consumer Price Index, these price changes equate to 56 and 100 percent in real terms. Wide variation exists across food products, with nominal maize prices increasing by 19 per-cent (or 11 percent in real terms), and rice prices declining by 13 percent (or 7 percent in real terms) over the same period. Prices of nonfood commodities also rose substantially. Whereas crude oil prices rose 44 percent (or 34 percent in real terms), natural gas and fertilizer prices both doubled (or 88 and 101 percent in real terms, respectively). As shown in the breakdown in the bar chart, most of the price growth occurred after the start of the war in Ukraine, except for fertilizer