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Does trade liberalization enhance income growth and equity in Zimbabwe?: the role of complimentary policies

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  • Bautista, Romeo M.
  • Lofgren, Hans
  • Thomas, Marcelle

Abstract

Using an agriculture-focused CGE model for Zimbabwe with 1991 as base period, this paper examines quantitatively the income and equity effects of trade liberalization in isolation and in conjunction with potentially complementary changes in fiscal and land policies. Trade policy reform alone (dismantling of import and foreign exchange controls, and reduction of import taxes to a low uniform rate) is shown to increase aggregate disposable household income significantly. However, the least income gain accrues to smallholder farm households, which account for about four-fifths of the poor in Zimbabwe, so the equity impact is unfavorable. Concurrent implementation with specific changes in government expenditure and tax policies and two alternative stylized land redistribution schemes yields differing outcomes in terms of aggregate household income growth and its distribution.

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Bibliographic Info

Paper provided by International Food Policy Research Institute (IFPRI) in its series TMD discussion papers with number 32.

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Date of creation: 1998
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Handle: RePEc:fpr:tmddps:32

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Keywords: Trade liberalization Econometric models.; Zimbabwe Economic policy.; Income distribution Zimbabwe.; Fiscal policies ;

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  1. de Melo, Jaime & Robinson, Sherman, 1981. "Trade Policy and Resource Allocation in the Presence of Product Differentiation," The Review of Economics and Statistics, MIT Press, vol. 63(2), pages 169-77, May.
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Cited by:
  1. Margaret Chitiga & Ramos Mabugu & Tonia Kandiero, 2007. "A Computable General Equilibrium Micro-Simulation Analysis of the Impact of Trade Policies on Poverty in Zimbabwe," Working Papers 200715, University of Pretoria, Department of Economics.

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