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Agricultural Trade, Liberalization, Productivity Gain, and Poverty Alleviation: a General Equilibrium Analysis

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  • Nadia Belhaj Hassine
  • Véronique Robichaud
  • Bernard Decaluwe

Abstract

Computable General Equilibrium (CGE) models have gained continuously in popularity as an empirical tool for assessing the impact of trade liberalization on agricultural growth, poverty, and income distribution. However, conventional models ignore the channels linking technical change in agriculture, trade openness, and poverty. This study seeks to incorporate econometric evidence of these linkages into a CGE model to estimate the impact of alternative trade liberalization scenarios on poverty and equity. The analysis uses the Latent Class Stochastic Frontier Model (LCSFM) and the metafrontier function to investigate the influence of trade openness on agricultural technological change. The estimated productivity effects induced from higher levels of trade are combined with a general equilibrium analysis of trade liberalization to evaluate the income and price changes. These effects are then used to infer the impact on poverty and inequality following the top-down approach. The model is applied to Tunisian data using the social accounting matrix of 2001 and the 2000 household expenditures surveys. Poverty is found to decline under agricultural and full trade liberalization and this decline is much more pronounced when the productivity effects are included.

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Paper provided by PEP-MPIA in its series Working Papers MPIA with number 2010-09.

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Date of creation: 2010
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Handle: RePEc:lvl:mpiacr:2010-09

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Keywords: Openness; Agriculture; Productivity; Poverty; CGE modeling;

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Cited by:
  1. Llop Llop, Maria & Ponce Alifonso, Xavier,, 2012. "Agriculture, technological change and environmental sustainability: Looking for a win-win water policy strategy," Working Papers 2072/203158, Universitat Rovira i Virgili, Department of Economics.
  2. De Silva, Nirodha & Malaga, Jaime E. & Johnson, Jeffrey W., 2013. "Trade Liberalization Effects On Agricultural Production Growth: The Case Of Sri Lanka," 2013 Annual Meeting, February 2-5, 2013, Orlando, Florida, Southern Agricultural Economics Association 143106, Southern Agricultural Economics Association.

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