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Trade reform and the poor in Morocco: a rural-urban general equilibrium analysis of reduced protection

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  • Lofgren, Hans
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    Abstract

    Morocco is currently about to start reducing industrial protection in the context of its association agreement with the European Union. However, agriculture, which represents the major income source for the disfavored rural population, is the sector that is most strongly protected. In this study, a general equilibrium model of Morocco is used as a laboratory for analyzing the short-run equilibrium effects of alternative scenarios for reduced protection for agriculture and industry. The model, which is calibrated to a Social Accounting Matrix for 1994, is distinguished by an explicit separation of activities, factors, and households into rural and urban. It has a detailed treatment of agricultural and other rural production, the labor market, and households (disaggregated into four types: rural poor, rural non-poor, urban poor, urban non-poor). The simulation results indicate that reduced agricultural protection would generate significant aggregate welfare gains at the same time a significant part of the disadvantaged rural population would lose strongly. The impact of industrial tariff cuts is small. The outcome is less unfavorable for rural households over a slightly longer time frame where labor migration between agriculture, the rest of the rural economy and urban areas is feasible. The results for simulations that introduce compensatory measures targeting the rural population suggest that the dilemma presented by the tradeoff between aggregate and rural welfare can be overcome: in simulations introducing trade liberalization together with government transfers to owners of rainfed agricultural resources, or moderate improvements in rural skill levels or productivity in rural non-agriculture, the gains from trade liberalization are shared relatively evenly among all household groups.

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    Bibliographic Info

    Paper provided by International Food Policy Research Institute (IFPRI) in its series TMD discussion papers with number 38.

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    Date of creation: 1999
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    Handle: RePEc:fpr:tmddps:38

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    Keywords: Social accounting.; Equilibrium (Economics); Welfare economics.; Morocco.; Tariff Mathematical models.; Trade liberalization.;

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    1. Maurizio Bussolo & David Roland-Holst, 1993. "A Detailed Input-Output Table for Morocco, 1990," OECD Development Centre Working Papers 90, OECD Publishing.
    2. Rutherford, Thomas F. & Rutstrom, E.E. & Tarr, David, 1993. "Morocco's free trade agreement with the European community : a quantitative assessment," Policy Research Working Paper Series 1173, The World Bank.
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    Cited by:
    1. Nadia Belhaj Hassine & Véronique Robichaud & Bernard Decaluwe, 2010. "Agricultural Trade, Liberalization, Productivity Gain, and Poverty Alleviation: a General Equilibrium Analysis," Working Papers MPIA 2010-09, PEP-MPIA.
    2. Mamoon, Dawood & Murshed, S. Mansoob, 2011. "Labour Markets, Education and Duality of Returns," MPRA Paper 29529, University Library of Munich, Germany.
    3. Alemayehu Geda, 2006. "Openness, Inequality and Poverty in Africa," Working Papers 25, United Nations, Department of Economics and Social Affairs.
    4. Bittencourt, Mauricio V.L. & Kraybill, David S. & Larson, Donald W., 2006. "Consequences Of Trade Liberalization On Poverty And Income Distribution In Brazil," 2006 Annual meeting, July 23-26, Long Beach, CA 21128, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Nicolas Hérault, 2004. "Un modèle d'équilibre général calculable (MEGC) pour évaluer les effets de l'ouverture au commerce international : le cas de l'Afrique du Sud," Documents de travail 102, Groupe d'Economie du Développement de l'Université Montesquieu Bordeaux IV.
    6. Agenor, Pierre-Richard & Aynaoui, Karim El, 2003. "Labor market policies and unemployment in Morocco : a quantitative analysis," Policy Research Working Paper Series 3091, The World Bank.
    7. Mamoon, Dawood, 2007. "How May International Trade affect Poverty in a Developing Country Setup? The Inequality Channel," MPRA Paper 2716, University Library of Munich, Germany.

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