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Evaluating Poverty Impacts of Globalization and Trade Policy Changes on Agricultural Producers

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  • Valenzuela, Ernesto
  • Hertel, Thomas W.
  • Ivanic, Maros
  • Nin Pratt, Alejandro

Abstract

The poverty effects and in particular the impact of trade liberalization on smallholder livestock producers in African and South East Asian developing countries (Malawi, Zambia, Uganda, Mozambique, Vietnam, Bangladesh, Indonesia, and Philippines) is addressed by disaggregating income sources within agriculture into earnings from crop and livestock production. Given that livestock production in our developing country sample is a marginal activity with very little concentration households are stratified according to a small dependence on livestock earnings, and thus separating them from crops specialized earnings households, households who are wage labor specialized, transfer dependent households, and diversified households. We combine a macro-economic framework based on a Computable General Equilibrium global model, with a micro-economic follow-up simulation drawing on information contained in eight countries’' household surveys. In the assessment of poverty impacts of global trade liberalization we find significant cross-country differences between the short and long run. For all countries in our sample, with the exception of Philippines in the short run and Zambia in the long run (no change), the national headcount measure of poverty is reduced after trade liberalization. We provide an in-depth look at poverty changes in one of these economies – Malawi – where a substantial portion of the population is engaged in small-holder agriculture. The differential effects by stratum and the distributional welfare impact along the income distribution constitute a significant resource for policy makers concerned about the impact of trade liberalization on the agriculture sector and more specifically on livestock activities.

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Bibliographic Info

Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2004 Annual meeting, August 1-4, Denver, CO with number 20242.

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Date of creation: 2004
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Handle: RePEc:ags:aaea04:20242

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Keywords: International Relations/Trade;

References

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  1. Hertel, Thomas W. & Maros Ivanic & Paul Preckel & John Cranfield, 2004. "The Earnings Effects of Multilateral Trade Liberalization: Implications for Poverty in Developing Countries," GTAP Working Papers 1208, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  2. Harrison, Glenn W. & Rutherford, Thomas F. & Tarr, David G., 2003. "Trade liberalization, poverty and efficient equity," Journal of Development Economics, Elsevier, vol. 71(1), pages 97-128, June.
  3. Cranfield, J. A. L. & Preckel, Paul V. & Eales, James S. & Hertel, Thomas W., 2002. "Estimating consumer demands across the development spectrum: maximum likelihood estimates of an implicit direct additivity model," Journal of Development Economics, Elsevier, vol. 68(2), pages 289-307, August.
  4. Maureen T. Rimmer & Alan A. Powell, 1992. "Demand Patterns Across the Development Spectrum: Estimates for the AIDADS System," Centre of Policy Studies/IMPACT Centre Working Papers op-75, Victoria University, Centre of Policy Studies/IMPACT Centre.
  5. Harrison, Glenn W. & Rutherford, Thomas F. & Tarr,David & Gurgel, Angelo, 2003. "Regional, multilateral, and unilateral trade policies on MERCOSUR for growth and poverty reduction in Brazil," Policy Research Working Paper Series 3051, The World Bank.
  6. Reimer, Jeffrey J., 2002. "Estimating the poverty impacts of trade liberalization," Policy Research Working Paper Series 2790, The World Bank.
  7. William R. Cline, 2004. "Trade Policy and Global Poverty," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 379.
  8. Lipton, Michael & Ravallion, Martin, 1995. "Poverty and policy," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 41, pages 2551-2657 Elsevier.
  9. Cranfield, J. A. L. & Preckel, Paul V. & Eales, James S. & Hertel, Thomas W., 2004. "Simultaneous estimation of an implicit directly additive demand system and the distribution of expenditure--an application of maximum entropy," Economic Modelling, Elsevier, vol. 21(2), pages 361-385, March.
  10. Decaluwe, B. & Patry, A. & Savard, L. & Thorbecke, E., 1999. "Poverty Analysis Within a General Equilibrium Framework," Cahiers de recherche 9909, Université Laval - Département d'économique.
  11. L. Alan Winters & Neil McCulloch & Andrew McKay, 2004. "Trade Liberalization and Poverty: The Evidence So Far," Journal of Economic Literature, American Economic Association, vol. 42(1), pages 72-115, March.
  12. Ivanic, Maros, 2004. "Reconciliation of the GTAP and Household Survey Data," GTAP Research Memoranda 1408, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  13. Maureen T. Rimmer & Alan A. Powell, 1992. "An Implicitly Directly Additive Demand System: Estimates for Australia," Centre of Policy Studies/IMPACT Centre Working Papers op-73, Victoria University, Centre of Policy Studies/IMPACT Centre.
  14. Mistiaen, Johan A. & Ravallion, Martin, 2003. "Survey compliance and the distribution of income," Policy Research Working Paper Series 2956, The World Bank.
  15. Thomas W. Hertel & Maros Ivanic & Paul V. Preckel & John A. L. Cranfield, 2004. "The Earnings Effects of Multilateral Trade Liberalization: Implications for Poverty," World Bank Economic Review, World Bank Group, vol. 18(2), pages 205-236.
  16. Thomas W. Hertel & Maros Ivanic & Paul V. Preckel & John A.L. Cranfield & Will Martin, 2003. "Short- versus Long-Run Implications of Trade Liberalization for Poverty in Three Developing Countries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(5), pages 1299-1306.
  17. Cogneau, Denis & Robilliard, Anne-Sophie, 2000. "Growth, distribution and poverty in Madagascar," TMD discussion papers 61, International Food Policy Research Institute (IFPRI).
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Citations

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Cited by:
  1. Valenzuela, Ernesto & Hertel, Thomas W., 2006. "Poverty Vulnerability and Trade Policy: Are the Likely Impacts Discernable?," 2006 Annual meeting, July 23-26, Long Beach, CA 21397, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  2. Bureau, Jean-Christophe & Jean, Sebastien & Matthews, Alan, 2005. "Agricultural Trade Liberalization: Assessing the Consequences for Developing Countries," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24628, European Association of Agricultural Economists.
  3. Bureau, Jean-Christophe & Jean, Sebastien & Matthews, Alan, 2006. "The Consequences of Agricultural Trade Liberalization for Developing Countries," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25471, International Association of Agricultural Economists.

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