Trade Liberalisation and Poverty in Bangladesh: A General Equilibrium Approach

This paper uses a computable general equilibrium (CGE) model to investigate the impact on poverty of trade liberalisation in Bangladesh. The simulation results show that the complete removal of tariffs favours export oriented sectors in the economy. With trade liberalisation, rural and urban areas experience an overall reduction in poverty in the short run. However, a marginal increase in the poverty gap and poverty severity for urban areas is projected, implying that the poor become poorer in urban areas. Moreover, poverty incidences vary among various socio-economic groups. In the short run, poverty incidence increases for rural landless and urban illiterate and low-educated household groups. In contrast, the long run results highlight that trade liberalisation reduces absolute poverty for all groups both in rural and urban areas.Trade Liberalisation, Poverty, Bangladesh, Computable General Equilibrium (CGE) model., International Relations/Trade, Food Security and Poverty,

Analysing the causes of deforestation in a CGE framework: The case of the Philippines

A computable general equilibrium (CGE) model is developed to evaluate some of the causes of deforestation in the Philippines. To quantify deforestation effects, the elasticities of various parameters of deforestation as identified in the literature are evaluated. The main conclusion derived is that the factors that have a relatively more direct influence on the level of harvest such as annual allowable cut would have a greater effect on deforestation rate than population growth and off-farm employment opportunities

Effects of global trade liberalisation on forestry products and forest sustainability using the GTAP model

The paper analyses the effects of trade liberalization amongst the leading exporters and importers of forest products, in particular, as well as global merchandise, in general. The study utilises the Global Trade Analysis Project (GTAP) model and its database, version 7. Given that forest products only comprise a small proportion of world merchandise trade, it is expected that trade liberalisation would cause small changes in terms of trade, real GDP, production, consumption and prices of forest products in most countries. In the short-run, national welfare in China and Japan would increase substantially by more than $US400 million while the opposite is true for the United States. In the long-run, national welfare in China, Mexico and Thailand would increase between$US230 million and $US295 million. Food production in Australia, Chile and New Zealand would increase slightly but significantly compared to other countries/regions. Similarly, food consumption in Malaysia and Thailand would increase by about 0.10 per cent

Deforestation in the Philippines: An economic assessment of government policy responses

In the case of a land constraint economy such as the Philippines, the efficient allocation of land to its various uses is essential. This constraint is further intensified by the growing population and increased demand for commercial land. The process of land classification is only the first step in managing land resources. A computable general equilibrium (CGE) model based on ORANI, a multi-sectoral model belonging to the Johansen class of CGE models was employed to ascertain the economy-wide effects of the reduction in forestry production due to conservation efforts. The paper also attempts to show the relative contribution of population growth and trade policies on deforestation in the case of the Philippines. The study evaluated some of the forestry policies recommended by the Philippine Master Plan for Forestry Development (1991-2015). In theory, the policies formulated would be viable and effective. The problem lies in the implementation especially of reforestation activities, which is the core of the Master Plan. The Philippine forests require intensive regeneration programs to revive the domestic logging industry and conservation programs to protect sensitive areas as well as the establishment of tree plantations. The study evaluated four policies from the Master Plan, namely the implementation of selective logging, imposition of stumpage tax on the forestry sector, lowering of forestry discount rates and the establishment of set-aside areas. The study found that moving into a selective logging regime and the establishment of set-aside areas would achieve forest conservation with little reduction in economic growth. Moreover, the results show that (domestic) population per se would not significantly increase deforestation. Whilst, export taxes are ineffective tools in reducing deforestation, trade liberalisation policies are beneficial to the economy as a whole

The Impact of Trade Liberalisation on Poverty and Welfare in South Asia: A Special Reference to Sri Lanka

This chapter evaluates the economic impacts of SAFTA relative to alternative trade policies to determine which policies best deliver increased welfare to citizens, thereby helping to alleviate income disparities and poverty in the region. The study does so with a particular emphasis on the income inequality and poverty effects of trade liberalisation in South Asia on households in Sri Lanka. A static multi-country computable general equilibrium model for South Asia (SAMGEM) is formulated by incorporating a multiple household framework into the Global Trade Analysis Project (GTAP) model. A non-parametric extended representative household agent approach is used to estimate the income inequality and poverty effects of trade liberalisation in South Asia by using micro-household survey data. The findings revealed that amongst the different trade policy options considered, unilateral trade liberalisation ensures the highest welfare to all South Asian members followed by the customs union (with the exception of Sri Lanka) and the SAFTA. The poverty and income equality analysis for the Sri Lankan economy suggests that poverty is predominant in the rural and the estate sectors and Sri Lanka can achieve a significant progress towards poverty reduction as a result of implementing trade reforms

The contribution of carbon pricing to sustainable mining

Reductions in greenhouse gas emissions are essential to reducing the rate and scale of anthropogenic climate change to levels that can sustain the planet’s biosphere. A carbon tax is a policy measure that is designed to reduce greenhouse gas emissions by increasing the prices of the highest carbon-polluting goods and services in an economy, thus encouraging substitution towards resultant relatively cheaper and less-polluting goods where possible. When Australia introduced such a tax in 2012, there was a fear that it could threaten the resources boom, considered the engine of Australian economic growth in recent years. By employing a computable general equilibrium model and an environmentally-extended Social Accounting Matrix, this paper demonstrates the effects of a carbon tax on the resources sector. The modelled results show that, in a flexible exchange rate regime, all resources within the sector will be affected negatively but to different degrees. The brown coal sector will be the hardest hit, with a 25.74 per cent decrease in output, 52.94 per cent decrease in employment and 89.37 per cent decrease in profitability. However, other resources in the sector would be only mildly affected. From the point of view of sustainability, the most significant results are that, under the carbon tax, the resources sector contributes considerably to the carbon emission reduction target of Australia. Given that brown coal accounts for only a small portion of the resources sector, it is reasonable to suggest that a carbon tax would not significantly affect the overall performance of the sector

Trade Facilitation, Economic Development and Poverty Alleviation: South Asia at a Glance

South Asia faces enormous economic challenges unmitigated by generally poor economic growth. Increasing economic imbalance between countries hinders regional development. Recently, it has been confirmed that trade liberalisation aimed at expanding trade, has been insufficient in optimising the potential contribution of trade to economic development and reduce poverty. Thus, economists pay attention on Trade Facilitation (TF) which has the potential to contribute to economic development. This has motivated us to examine how TF can achieve this development in South Asia, where trade has yet to make its full contribution to economic growth. The aim of this chapter is to examine the economic impacts of TF on trade and economic growth in South Asia. Our analysis revealed that poor TF restricts trade between countries as it increases Trade Transaction Costs (TTCs). Trade delays are relatively high and affect the region’s landlocked countries even more adversely. An efficiently facilitated trading system will enable these countries to participate more actively in global trade. There has been greater focus on TF policies in South Asia, however due to the complexity of TF measures and their investment needs, it is difficult to identify which TF measures have the most significance for the region

Exchange Rate Volatility and its Impact on Trade Performance in Australia: Empirical Evidence from Aggregate, Sectoral and Bilateral Trade Data Levels

As an important macro variable, the exchange rate has a significant influence on the whole economy. This study focuses on the impact of exchange rate volatility on trade performance in Australia given the evidence from the Autoregressive Distributed Lag (ARDL) bounds testing approach at aggregate, sectoral and bilateral trade data levels. Despite the considerable amount of research that has been undertaken to analyse the impact of exchange rate volatility on trade performance, studies of the impact of exchange rate volatility on trade performance have reported many conflicting results since the results are significantly influenced both by the authors' modelling strategies, for example, the choices of sampling period, model specification, measurements of exchange rate volatility and countries considered, and by the contexts of their investigations. Some studies demonstrate that there are negative relationships between exchange rate volatility and trade performance whereas other studies show positive relationships. Some empirical literature suggests that exchange rate volatilities may have both positive and negative impacts on trade flows, while other studies show that there is no significant relationship between exchange rate volatility and trade flows. This study intends to explore new and previously unused quarterly data ranging from 1983 to 2007 and apply the ARDL bounds testing approach to estimate the effects of exchange rate volatility on Australia’s trade performance. This study makes a contribution to current research in various ways. First, this study develops two sets of nominal and real exchange rate volatility, applying the most commonly used measurements generated from moving average standard deviation (MSD) and the GARCH models for each nominal and real exchange rate. Secondly, it is based on a substantially longer period of quarterly data than previous studies. In addition, this study empirically investigates the impact of exchange rate volatility on the export and import flows of Australia from aggregate, sectoral and bilateral trade data levels, which can deal with the aggregation bias and deepen the analysis step by step and ensure the results are more reliable and robust

Trade Liberalisation in South Asia: Impact on Trade and Income Distribution in a Multi-Country CGE Model Focusing on the Sri Lankan Economy

In 1995, the seven South Asian countries: Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka, instigated a framework for region-wide integration under the South Asian Preferential Trading Agreement (SAPTA). Subsequently, the member countries agreed that SAPTA would take steps towards transformation into a South Asian Free Trade Area (SAFTA) by the beginning of 2006, with full implementation completed by 31 December 2015. The momentum towards regional preferential trading arrangements and greater regional economic integration raises many important issues for the individual countries and for the South Asian region as a whole; the region has second largest incidence of poverty in the world next to Sub-Saharan Africa. Even though the South Asian Association for Regional Co-operation (SAARC) members initiated regional economic initiatives in 1995, intra-regional trade still stands at an extremely low level, below five per cent even after a decade or so. Hence, it is important to evaluate the economic impacts of SAFTA relative to alternative trade policies to determine which policies boost intra-regional trade and best deliver increased welfare to citizens, thereby helping to alleviate income disparities and poverty in the region. This study does so with a particular emphasis on the income inequality and poverty effects of trade liberalisation in South Asia on households in Sri Lanka