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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.

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Bibliographic Info

Paper provided by PEP-MPIA in its series Working Papers MPIA with number 2007-16.

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Date of creation: 2007
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Handle: RePEc:lvl:mpiacr:2007-16

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Keywords: CGE Model; Trade liberalisation; Nigeria; Poverty; Dynamic; ECOWAS; Import tariffs;

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  1. 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.
  2. 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).
  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 177-99, February.
  4. 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).
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Cited by:
  1. 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.

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