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Agriculture-sector Policies and Poverty in the Philippines: a Computable General-Equilibrium (CGE) Analysis

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Author Info
Caesar B. Cororaton
Erwin L. Corong
Abstract

The Philippines has undertaken substantial trade-policy reforms since the 1980s. However, the poverty impact is not very clear and has been the subject of intense debate, most crucial of which is the likely poverty effects of liberalizing the highly protected agricultural sector. A CGE micro-simulation model is employed to estimate and explain these impacts. Tariff reduction induces consumers to substitute cheaper imported agricultural products for domestic goods, thereby resulting in a contraction in agricultural output. In contrast, the prevalence of cheap, imported inputs reduces the domestic cost of production, benefiting the outward-oriented and import-dependent industrial sector as their output and export increases. The national poverty headcount decreases marginally as lower consumer prices outweigh the income reduction experienced by the majority of households. However, both the poverty gap and severity of poverty worsens, implying that the poorest of the poor become even poorer.

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Paper provided by PEP-MPIA in its series Cahiers de recherche MPIA with number 2006-09.

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Date of creation: 2006
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Handle: RePEc:lvl:mpiacr:2006-09

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Related research
Keywords: Agriculture; International trade; Poverty; Computable general equilibrium; Micro-simulation; Philippines;

Find related papers by JEL classification:
D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
E27 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation
F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
I32 - Health, Education, and Welfare - - Welfare and Poverty - - - Measurement and Analysis of Poverty
O13 - Economic Development, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
O24 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Thomas Hertel & Jeffrey Reimer, 2005. "Predicting the poverty impacts of trade reform," Journal of International Trade & Economic Development, Taylor and Francis Journals, vol. 14(4), pages 377-405, December. [Downloadable!] (restricted)
    Other versions:
  2. Caesar B. Cororaton & John Cockburn, 2005. "Trade Reform and Poverty in the Philippines: a Computable General Equilibrium Microsimulation Analysis," Cahiers de recherche 0513, CIRPEE. [Downloadable!]
  3. de Janvry, Alain & Sadoulet, Elisabeth & Fargeix, Andre, 1991. "Politically feasible and equitable adjustment: Some alternatives for ecuador," World Development, Elsevier, vol. 19(11), pages 1577-1594, November. [Downloadable!] (restricted)
  4. Decaluwe, B. & Patry, A. & Savard, L. & Thorbecke, E., 1999. "Poverty Analysis Within a General Equilibrium Framework," Papers 9909, Laval - Recherche en Politique Economique.
    Other versions:
  5. John Cockburn, 2004. "Trade Liberalisation and Poverty in Nepal A Computable General Equilibrium Micro Simulation Analysis," Development and Comp Systems 0409012, EconWPA. [Downloadable!]
  6. 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. [Downloadable!] (restricted)
  7. Hertel, Thomas & David Hummels & Maros Ivanic & Roman Keeney, 2003. "How Confident Can We Be in CGE-Based Assessments of Free Trade Agreements?," GTAP Working Papers 1324, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University. [Downloadable!]
    Other versions:
  8. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-66, May. [Downloadable!] (restricted)
  9. Cororaton, Caesar B. & Cockburn, John & Corong, Erwin, 2005. "Doha scenarios, trade reforms, and poverty in the Philippines : a computable general equilibrium analysis," Policy Research Working Paper Series 3738, The World Bank. [Downloadable!]
  10. Coxhead, Ian & Warr, Peter G., 1995. "Does Technical Progress In Agriculture Alleviate Poverty? A Philippine Case Study," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 39(01), April. [Downloadable!]
  11. Austria, Myrna S., 2002. "The Philippines in the Global Trading Environment: Looking Back and the Road Ahead," Discussion Papers DP 2002-15, Philippine Institute for Development Studies. [Downloadable!]
  12. Aldaba, Rafaelita Mercado, 2005. "Policy Reversals, Lobby Groups and Economic Distortions," Discussion Papers DP 2005-04, Philippine Institute for Development Studies. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Erwin L. Corong, 2008. "Tariff Reduction, Carbon Emissions and Poverty: An Economy-Wide Assessment for the Philippines," EEPSEA Research Report rr2008012, Economy and Environment Program for Southeast Asia (EEPSEA), revised Jan 2008. [Downloadable!]
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