IDEAS home Printed from https://ideas.repec.org/a/spr/jecstr/v9y2020i1d10.1186_s40008-020-00228-y.html
   My bibliography  Save this article

Agricultural policies, agricultural production and rural households’ welfare in Ethiopia

Author

Listed:
  • Zewdie Habte Shikur

    (University of Johannesburg)

Abstract

The paper employs the computable general equilibrium (CGE) model of the Oromia region of Ethiopia to assess the macroeconomic impacts of agricultural policy on agricultural growth and rural households’ social welfare. The analysis is based on social accounting matrix (SAM) of Oromia region. This Oromia SAM is employed as a framework to estimate the effects of policy shocks on rural households’ social welfare. This SAM provides base year data needed for policy simulation in CGE model of Oromia region. This study develops two simulations based on economic assumptions and tests their effects on agricultural production, and social welfare. The first set of experiment focuses on the irrigation policies that change the factor intensities in the production of agricultural commodities, and the second one focuses on the precision agriculture that raises agricultural productivity in the use of technologies. The analysis identifies that irrigation scaling up has a positive effect on agricultural production, and social welfare. The application of precision agriculture generates a significant and positive effect on agricultural productivity and production, and rural households’ income and consumption. This finding suggests that price support policy should be implemented simultaneously with suggested policies.

Suggested Citation

  • Zewdie Habte Shikur, 2020. "Agricultural policies, agricultural production and rural households’ welfare in Ethiopia," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 9(1), pages 1-21, December.
    • Handle: RePEc:spr:jecstr:v:9:y:2020:i:1:d:10.1186_s40008-020-00228-y
    DOI: 10.1186/s40008-020-00228-y
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1186/s40008-020-00228-y
    File Function: Abstract
    Download Restriction: no
    File URL: https://libkey.io/10.1186/s40008-020-00228-y?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Janvry, Alain De, 1985. "Integration of Agriculture in the National and World Economy: Implications for Agricultural Policies in Developing Countries," 1985 Conference, August 26-September 4, 1985, Malaga, Spain 182538, International Association of Agricultural Economists.
    2. Eicher, Carl K., 1995. "Zimbabwe's maize-based Green Revolution: Preconditions for replication," World Development, Elsevier, vol. 23(5), pages 805-818, May.
    3. Smale, Melinda, 1995. ""Maize is life": Malawi's delayed Green Revolution," World Development, Elsevier, vol. 23(5), pages 819-831, May.
    4. Schiff, Maurice & Montenegro, Claudio E, 1997. "Aggregate Agricultural Supply Response in Developing Countries: A Survey of Selected Issues," Economic Development and Cultural Change, University of Chicago Press, vol. 45(2), pages 393-410, January.
    5. Steven J. Keuning & Willem A. de Ruuter, 1988. "Guidelines To The Construction Of A Social Accounting Matrix," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 34(1), pages 71-100, March.
    6. Burfisher,Mary E., 2011. "Introduction to Computable General Equilibrium Models," Cambridge Books, Cambridge University Press, number 9780521766968, December.
    7. Cummings, Ralph Jr. & Rashid, Shahidur & Gulati, Ashok, 2006. "Grain price stabilization experiences in Asia: What have we learned?," Food Policy, Elsevier, vol. 31(4), pages 302-312, August.
    8. Nicholas E. Rada & Steven T. Buccola & Keith O. Fuglie, 2010. "Government Policy and Agricultural Productivity in Indonesia," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 93(3), pages 863-880.
    9. Thirtle, Colin & Lin, Lin & Piesse, Jenifer, 2003. "The Impact of Research-Led Agricultural Productivity Growth on Poverty Reduction in Africa, Asia and Latin America," World Development, Elsevier, vol. 31(12), pages 1959-1975, December.
    10. Hagos, Fitsum & Makombe, Godswill & Namara, Regassa & Awulachew, Seleshi Bekele, 2008. "Importance of irrigated agriculture to the Ethiopian economy: capturing the direct net benefits of irrigation," IWMI Conference Proceedings 246409, International Water Management Institute.
    11. L. Rachel Ngai & Christopher A. Pissarides, 2007. "Structural Change in a Multisector Model of Growth," American Economic Review, American Economic Association, vol. 97(1), pages 429-443, March.
    12. Willem Gunning, Jan & Keyzer, Michiel A., 1995. "Applied general equilibrium models for policy analysis," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 35, pages 2025-2107, Elsevier.
    13. Won W. Koo & P. Lynn Kennedy, 2006. "The Impact of Agricultural Subsidies on Global Welfare," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(5), pages 1219-1226.
    14. Alston, Julian M. & Beddow, Jason M. & Pardey, Philip G., 2009. "Mendel versus Malthus: Research, Productivity and Food Prices in the Long Run," Staff Papers 53400, University of Minnesota, Department of Applied Economics.
    15. Arndt, Channing & Benfica, Rui & Tarp, Finn & Thurlow, James & Uaiene, Rafael, 2010. "Biofuels, poverty, and growth: a computable general equilibrium analysis of Mozambique," Environment and Development Economics, Cambridge University Press, vol. 15(1), pages 81-105, February.
    16. Alain de Janvry & Elisabeth Sadoulet, 2010. "Agricultural Growth and Poverty Reduction: Additional Evidence," The World Bank Research Observer, World Bank, vol. 25(1), pages 1-20, February.
    17. Christian Otchia, 2014. "Agricultural Modernization, Structural Change and Pro-poor Growth: Policy Options for the Democratic Republic of Congo," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 3(1), pages 1-43, December.
    18. Franzel, Steven & Colburn, Forrest & Degu, Getahun, 1989. "Grain marketing regulations : Impact on peasant production in Ethiopia," Food Policy, Elsevier, vol. 14(4), pages 347-358, November.
    19. Lau, Lawrence J. & Yotopoulos, Pan A., 1989. "The meta-production function approach to technological change in world agriculture," Journal of Development Economics, Elsevier, vol. 31(2), pages 241-269, October.
    20. World Bank, 2003. "Global Economic Prospects 2004 : Realizing the Development Promise of the Doha Agenda," World Bank Publications - Books, The World Bank Group, number 14782, December.
    21. Steve Boucher & J. Edward Taylor, 2006. "Subsistence Response to Market Shocks," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(2), pages 279-291.
    22. Roberts, Barbara M, 1994. "Calibration Procedure and the Robustness of CGE Models: Simulations with a Model for Poland," Economic Change and Restructuring, Springer, vol. 27(3), pages 189-210.
    23. Birner, Regina & Resnick, Danielle, 2010. "The Political Economy of Policies for Smallholder Agriculture," World Development, Elsevier, vol. 38(10), pages 1442-1452, October.
    24. Zewdie Habte Shikur, 2020. "Industrial policy measure and economic structure in Ethiopia: the case of Oromia region," International Journal of Economic Policy Studies, Springer, vol. 14(1), pages 255-274, February.
    25. Xavier Irz & Lin Lin & Colin Thirtle & Steve Wiggins, 2001. "Agricultural Productivity Growth and Poverty Alleviation," Development Policy Review, Overseas Development Institute, vol. 19(4), pages 449-466, December.
    26. A. R. Pagan & J. H. Shannon, 1987. "How Reliable are ORANI Conclusions?," The Economic Record, The Economic Society of Australia, vol. 63(1), pages 33-45, March.
    27. Pagan, A R & Shannon, J H, 1987. "How Reliable Are ORAN I Conclusions?," The Economic Record, The Economic Society of Australia, vol. 63(180), pages 33-45, March.
    28. Schneider, Uwe A. & Havlík, Petr & Schmid, Erwin & Valin, Hugo & Mosnier, Aline & Obersteiner, Michael & Böttcher, Hannes & Skalský, Rastislav & Balkovic, Juraj & Sauer, Timm & Fritz, Steffen, 2011. "Impacts of population growth, economic development, and technical change on global food production and consumption," Agricultural Systems, Elsevier, vol. 104(2), pages 204-215, February.
    29. Byerlee, Derek & Spielman, David J. & Alemu, Dawit & Gautam, Madhur, 2007. "Policies to promote cereal intensification in Ethiopia: A review of evidence and experience," IFPRI discussion papers 707, International Food Policy Research Institute (IFPRI).
    30. Fan Hu & John M. Antle, 1993. "Agricultural Policy and Productivity: International Evidence," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 15(3), pages 495-505.
    31. Rakotoarisoa, Manitra A., 2011. "The impact of agricultural policy distortions on the productivity gap: Evidence from rice production," Food Policy, Elsevier, vol. 36(2), pages 147-157, April.
    32. Boussard, Jean-Marc, 2006. "Consequences of price volatility in evaluating the benefits of liberalisation," MPRA Paper 4467, University Library of Munich, Germany.
    33. Michael Morris & Valerie A. Kelly & Ron J. Kopicki & Derek Byerlee, 2007. "Fertilizer Use in African Agriculture : Lessons Learned and Good Practice Guidelines," World Bank Publications - Books, The World Bank Group, number 6650, December.
    34. Quentin Wodon & Hassan Zaman, 2010. "Higher Food Prices in Sub-Saharan Africa: Poverty Impact and Policy Responses," The World Bank Research Observer, World Bank, vol. 25(1), pages 157-176, February.
    35. Demeke, Mulat & Dawe, David & Tefft, James & Ferede, Tadele & Bell, Winnie, 2012. "Stabilizing price incentives for staple grain producers in the context of broader agricultural policies: debates and country experiences," ESA Working Papers 288996, Food and Agriculture Organization of the United Nations, Agricultural Development Economics Division (ESA).
    36. Godswill, M. & Namara, Regassa & Hagos, Fitsum & Awulachew, Seleshi Bekele & Ayana, M. & Awulachew Bossio, Deborah, 2011. "A comparative analysis of the technical efficiency of rain-fed and smallholder irrigation in Ethiopia," IWMI Working Papers H044123, International Water Management Institute.
    37. Yair Mundlak & René Hellinghausen, 1982. "The Intercountry Agricultural Production Function: Another View," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 64(4), pages 664-672.
    38. Wang, Honglin & Dong, Xiaoxia & Rozelle, Scott & Huang, Jikun & Reardon, Thomas, 2009. "Producing and Procuring Horticultural Crops with Chinese Characteristics: The Case of Northern China," World Development, Elsevier, vol. 37(11), pages 1791-1801, November.
    39. Burfisher,Mary E., 2011. "Introduction to Computable General Equilibrium Models," Cambridge Books, Cambridge University Press, number 9780521139779, December.
    40. Stefan Tangermann, 2005. "Organisation for Economic Co-operation and Development Area Agricultural Policies and the Interests of Developing Countries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(5), pages 1128-1144.
    41. Jagdish N. Bhagwati, 2004. "In Defense of Globalization: It Has a Human Face," Rivista di Politica Economica, SIPI Spa, vol. 94(6), pages 9-20, November-.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jale Amanuel Dufera & Tewodros Addisu Yate & Tadesse Tujuba Kenea, 2023. "Spatiotemporal analysis of drought in Oromia regional state of Ethiopia over the period 1989 to 2019," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 117(2), pages 1569-1609, June.
    2. Corbelle-Rico, Eduardo & Sánchez-Fernández, Patricio & López-Iglesias, Edelmiro & Lago-Peñas, Santiago & Da-Rocha, José-María, 2022. "Putting land to work: An evaluation of the economic effects of recultivating abandoned farmland," Land Use Policy, Elsevier, vol. 112(C).
    3. Ikhide, Emily Edoisa & Umaru, Ezra K. & Oyebola, Fehintola & Omoju, Oluwasola E., 2021. "A CGE Analysis of the Gender Productivity Gap in Nigeria’s Agriculture Sector," 2021 Conference, August 17-31, 2021, Virtual 315922, International Association of Agricultural Economists.
    4. Ashebir, Seyoum Feyisa, 2022. "Review of the Role of Orphan Crops in Food Security," Research on World Agricultural Economy, Nan Yang Academy of Sciences Pte Ltd (NASS), vol. 3(2), April.
    5. Essossinam Ali & Nimonka Bayale, 2024. "Impact of Public Agricultural Investment on Crops Production, Households’ Welfare, and Employment Generation Opportunities in Togo, West Africa," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 36(1), pages 161-193, February.
    6. Shikur, Zewdie Habte, 2021. "Potato and Tomato Supply and Yield Responses to Policy in Ethiopia," African Journal of Economic Review, African Journal of Economic Review, vol. 9(4), September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Christian Otchia, 2014. "Agricultural Modernization, Structural Change and Pro-poor Growth: Policy Options for the Democratic Republic of Congo," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 3(1), pages 1-43, December.
    2. Shikur, Zewdie Habte, 2021. "Potato and Tomato Supply and Yield Responses to Policy in Ethiopia," African Journal of Economic Review, African Journal of Economic Review, vol. 9(4), September.
    3. Hendricks, Nathan P. & Smith, Aaron D. & Villoria, Nelson B., 2018. "Global Agricultural Supply Response to Persistent Price Shocks," 2018 Annual Meeting, August 5-7, Washington, D.C. 274338, Agricultural and Applied Economics Association.
    4. J. Edward Taylor, 2012. "A Methodology for Local Economy-Wide Impact Evaluation (LEWIE) of Cash Transfers," Working Papers 99, International Policy Centre for Inclusive Growth.
    5. Yalew, Amsalu W. & Hirte, Georg & Lotze-Campen, Hermann & Tscharaktschiew, Stefan, 2017. "General equilibrium effects of public adaptation in agriculture in LDCs: Evidence from Ethiopia," CEPIE Working Papers 11/17, Technische Universität Dresden, Center of Public and International Economics (CEPIE).
    6. Rainer Klump & César Miralles Cabrera, 2008. "Biased Technological Change in Agriculture: The Hayami-Ruttan Hypothesis Revisited," DEGIT Conference Papers c013_016, DEGIT, Dynamics, Economic Growth, and International Trade.
    7. Joshua Elliott & Meredith Franklin & Ian Foster & Todd Munson & Margaret Loudermilk, 2012. "Propagation of Data Error and Parametric Sensitivity in Computable General Equilibrium Models," Computational Economics, Springer;Society for Computational Economics, vol. 39(3), pages 219-241, March.
    8. Larson,Donald F. & Muraoka,Rie & Otsuka,Keijiro, 2016. "On the central role of small farms in African rural development strategies," Policy Research Working Paper Series 7710, The World Bank.
    9. Nathan P. Hendricks & Aaron Smith & Nelson B. Villoria & Matthieu Stigler, 2023. "The effects of agricultural policy on supply and productivity: Evidence from differential changes in distortions," Agricultural Economics, International Association of Agricultural Economists, vol. 54(1), pages 44-61, January.
    10. Mundlak, Yair & Butzer, Rita & Larson, Donald F., 2012. "Heterogeneous technology and panel data: The case of the agricultural production function," Journal of Development Economics, Elsevier, vol. 99(1), pages 139-149.
    11. Macours, Karen & Swinnen, Johan F. M., 2000. "Causes of Output Decline in Economic Transition: The Case of Central and Eastern European Agriculture," Journal of Comparative Economics, Elsevier, vol. 28(1), pages 172-206, March.
    12. Dorosh, Paul & Thurlow, James, 2018. "Beyond Agriculture Versus Non-Agriculture: Decomposing Sectoral Growth–Poverty Linkages in Five African Countries," World Development, Elsevier, vol. 109(C), pages 440-451.
    13. Smale, Melinda & Byerlee, Derek & Jayne, Thom, 2011. "Maize revolutions in Sub-Saharan Africa," Policy Research Working Paper Series 5659, The World Bank.
    14. Dorosh, Paul A. & Thurlow, James, 2014. "Beyond agriculture versus nonagriculture: Decomposing sectoral growth–poverty linkages in five African countries:," IFPRI discussion papers 1391, International Food Policy Research Institute (IFPRI).
    15. Ogundari, Kolawole & Awokuse, Titus, 2016. "Assessing the Contribution of Agricultural Productivity to Food Security levels in Sub-Saharan African countries," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235730, Agricultural and Applied Economics Association.
    16. Emelie Rohne Till, 2021. "A green revolution in sub‐Saharan Africa? The transformation of Ethiopia's agricultural sector," Journal of International Development, John Wiley & Sons, Ltd., vol. 33(2), pages 277-315, March.
    17. Derek Headey & Mohammad Alauddin & D.S. Prasada Rao, 2010. "Explaining agricultural productivity growth: an international perspective," Agricultural Economics, International Association of Agricultural Economists, vol. 41(1), pages 1-14, January.
    18. M. Alejandro Cardenete & M. Carmen Lima & Ferran Sancho, 2013. "Are There Key Sectors? An Appraisal Using Applied General Equilibrium," The Review of Regional Studies, Southern Regional Science Association, vol. 43(2,3), pages 111-129, Winter.
    19. Cai, Yiyong & Newth, David & Finnigan, John & Gunasekera, Don, 2015. "A hybrid energy-economy model for global integrated assessment of climate change, carbon mitigation and energy transformation," Applied Energy, Elsevier, vol. 148(C), pages 381-395.
    20. Fiorini, Matteo; Lebrand, Mathilde, 2016. "The Political Economy of Services Trade Agreements," Economics Working Papers ECO2016/05, European University Institute.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:jecstr:v:9:y:2020:i:1:d:10.1186_s40008-020-00228-y. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.