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Is increased agricultural protection beneficial for South Africa?

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  • Mabugu, Ramos
  • Chitiga, Margaret

Abstract

This paper focuses on the effects that a higher tariff on agriculture and food imports could have on poverty and the macroeconomy using a top down computable general equilibrium microsimulation model. This question is of broader relevance to developing countries that may be contemplating the use of World Trade Organisation permissible trade barriers so as to achieve a domestic policy objective. Generally speaking, the results suggest that doubling protection of agriculture and food would lead to a reallocation of labour toward the sectors with high initial protection and those with high domestic orientation. Agriculture and food sectors are harmed by increased protection if the government chooses to use indirect tax rates to compensate for revenue changes because of induced demand contraction by the indirect tax adjustment. Exports and imports in general decline. The analysis also shows that increasing food and agricultural protection has very negligible but negative effects on welfare and poverty.

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Bibliographic Info

Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 26 (2009)
Issue (Month): 1 (January)
Pages: 256-265

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Handle: RePEc:eee:ecmode:v:26:y:2009:i:1:p:256-265

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Web page: http://www.elsevier.com/locate/inca/30411

Related research

Keywords: CGE model Microsimulation Agricultural trade policy Special and differential treatment Poverty Welfare South Africa;

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References

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  1. Pauw, Kalie, 2005. "Creating a 2000 IES-LFS Database in Stata," Technical Paper Series 15628, PROVIDE Project.
  2. McDonald, Scott & Punt, Cecilia, 2005. "General equilibrium modelling in South Africa: What the future holds," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 44(1), March.
  3. Ramos Mabugu & Margaret Chitiga, 2007. "Poverty and Inequality Impacts of Trade Policy Reforms in South Africa," Working Papers MPIA 2007-19, PEP-MPIA.
  4. Servaas van der Berg & Ronelle Burger & Rulof Burger & Megan Louw & Derek Yu, 2006. "Trends in Poverty and Inequality since the Political Transition," Working Papers 06104, University of Cape Town, Development Policy Research Unit.
  5. Alberto Behar and Lawrence Edwards, 2004. "Estimating elasticities of demand and supply for South African manufactured exports using a vector error correction model," Economics Series Working Papers WPS/2004-04, University of Oxford, Department of Economics.
  6. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-66, May.
  7. Thurlow, James & van Seventer, Dirk Ernst, 2002. "A standard computable general equilibrium model for South Africa," TMD discussion papers 100, International Food Policy Research Institute (IFPRI).
  8. N. Hérault, 2006. "Building And Linking A Microsimulation Model To A Cge Model For South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 74(1), pages 34-58, 03.
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Cited by:
  1. Courtioux, Pierre & Gregoir, Stéphane & Houeto, Dede, 2014. "Modelling the distribution of returns on higher education: A microsimulation approach," Economic Modelling, Elsevier, vol. 38(C), pages 328-340.

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