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The Impacts of Trade Liberalization on Poverty in Nigeria: Dynamic Simulations in a CGE Model

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  • Manson Nwafor
  • Adeola Adenikinju
  • Kanayo Ogujiuba

Abstract

The study examines the effects that trade liberalization will have on poverty in Nigeria. Previous studies have been limited by static and partial equilibrium analysis. We use a Dynamic Computable General Equilibrium Model to analyze this issue. The more favorably affected sectors are capital intensive; therefore, capital income improves over time while land and labor income reduce. This has positive implications for urban households and negative implications for rural households due to the dependence of the latter on mostly land and labor income. As a result, urban poverty decreases in the short and long run while rural poverty increases in both periods. Policies to improve the agricultural sector will thus have to be implemented before or concurrently with trade liberalization in order for it to have a pro-poor effect. In this way, the rural areas which obtain most of their income from this sector will respond more positively to trade liberalization.

Suggested Citation

  • Manson Nwafor & Adeola Adenikinju & Kanayo Ogujiuba, 2007. "The Impacts of Trade Liberalization on Poverty in Nigeria: Dynamic Simulations in a CGE Model," Working Papers MPIA 2007-16, PEP-MPIA.
    • Handle: RePEc:lvl:mpiacr:2007-16
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    References listed on IDEAS

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    1. International Monetary Fund, 2005. "Nigeria: Selected Issues and Statistical Appendix," IMF Staff Country Reports 2005/303, International Monetary Fund.
    2. Oyejide, T. Ademola., 1986. "The effects of trade and exchange rate policies on agriculture in Nigeria.:," Research reports 55, International Food Policy Research Institute (IFPRI).
    3. Dissou, Yazid, 2002. "Dynamic Effects in Senegal of the Regional Trade Agreement among UEMOA Countries," Review of International Economics, Wiley Blackwell, vol. 10(1), pages 177-199, February.
    4. Lofgren, Hans & El-Said, Moataz & Robinson, Sherman, 1999. "Trade liberalization and complementary domestic policies: a rural-urban general equilibrium analysis of Morocco," TMD discussion papers 41, International Food Policy Research Institute (IFPRI).
    5. Agenor, Pierre-Richard & Izquierdo, Alejandro & Fofack, Hippolyte, 2003. "The integrated macroeconomic model for poverty analysis : a quantitative macroeconomic framework for the analysis of poverty reduction strategies," Policy Research Working Paper Series 3092, The World Bank.
    6. Unknown, 2001. "General Discussion," Proceedings of the 6th Agricultural and Food Policy Systems Information Workshop, 2000: Trade Liberalization Under NAFTA: Report Card on Agriculture 16839, Farm Foundation, Agricultural and Food Policy Systems Information Workshops.
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    Citations

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    Cited by:

    1. Obi-Egbedi, Ogheneruemu & Okoruwa, Victor O. & Yusuf, Sulaiman A. & Adenegan, Kemisola O. & Alarudeen, Aminu, 2013. "Rice Trade Protectionism Versus Liberalization in Nigeria: A CGE Analysis of Economic and Welfare Effects," 2013 Fourth International Conference, September 22-25, 2013, Hammamet, Tunisia 161528, African Association of Agricultural Economists (AAAE).
    2. Fiamohe, Rose & Diallo, Souleymane & Diagne, Aliou & Agossadou, Arsene, 2015. "Impact of the ECOWAS Common External Tariff on the Rice Sector in West Africa," 2015 Conference, August 9-14, 2015, Milan, Italy 211632, International Association of Agricultural Economists.
    3. Tamiru Lemi & Fekadu Hailu, 2019. "Effects of Climate Change Variability on Agricultural Productivity," International Journal of Environmental Sciences & Natural Resources, Juniper Publishers Inc., vol. 17(1), pages 14-20, February.
    4. N.M. Nkang & B.T. Omonona & S.A. Yusuf & O.A. Oni, 2013. "Simulating the Impact of Exogenous Food Price Shock on Agriculture and the Poor in Nigeria: Results from a Computable General Equilibrium Model," Economic Analysis and Policy, Elsevier, vol. 43(1), pages 79-94, March.
    5. Ole Boysen & Alan Matthews, 2008. "The Impact of Developed Country Agricultural Trade Liberalization on Poverty: A Survey," Working Papers hal-03416399, HAL.
    6. Kebede, Sindu & Fekadu, Belay & Aredo, Dejene, 2011. "Trade Liberalization and Poverty: A Macro-Micro Analysis in Ethiopia," Proceedings of the German Development Economics Conference, Berlin 2011 44, Verein für Socialpolitik, Research Committee Development Economics.
    7. Udi Joshua & Oladimeji M. Salami & Andrew A. Alola, 2020. "Toward the path of Economic Expansion in Nigeria: The Role of Trade Globalization," Working Papers 20/009, European Xtramile Centre of African Studies (EXCAS).

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    More about this item

    Keywords

    CGE Model; Trade liberalisation; Nigeria; Poverty; Dynamic; ECOWAS; Import tariffs;
    All these keywords.

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models

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