IDEAS home Printed from https://ideas.repec.org/a/taf/ragrxx/v53y2014i1p46-74.html
   My bibliography  Save this article

The role of agriculture in welfare, income distribution and economic development of the Free State Province of South Africa: A CGE approach

Author

Listed:
  • Y.T. Bahta
  • B.J. Willemse
  • B. Grove

Abstract

This article researches quantitatively two distinctive roles of agriculture in the Free State provincial economy: a buffer role and the role of poverty alleviation using a Computable General Equilibrium model. To examine the capacity of the agriculture sector to act as a "buffer" in the presence of a negative external shock to the Free State provincial economy, two different shocks are considered: an increase in the international oil price together with a decrease in the international gold price and a devaluation of South African currency. In these simulations, the agricultural sector does not play a buffer role of absorbing labour displaced from other sectors. Our hypothesis was that in the presence of a negative external shock, the agricultural sector would be able to absorb, to some extent, the negative impact, especially labour. The argument is that when the rest of the economy suffers a slowdown, people will "migrate" back to agriculture and therefore the agricultural sector will grow and increase its labour demand, alleviating the impacts of the crisis. To analyse the impact of the agriculture sector on welfare and income distribution, an increase in agricultural production, industrial production and other sectors is simulated through increased labour productivity. The results suggest that the agricultural sector plays a significant role in reducing poverty and improving income distribution, but considering poverty the results suggest that the manufacturing sector increases income more than other sectors. Our hypothesis is that growth based on agriculture has a greater impact on poor income households than industrial-based growth. The assumption behind this is that more poor households rely on agriculture than on other sectors.

Suggested Citation

  • Y.T. Bahta & B.J. Willemse & B. Grove, 2014. "The role of agriculture in welfare, income distribution and economic development of the Free State Province of South Africa: A CGE approach," Agrekon, Taylor & Francis Journals, vol. 53(1), pages 46-74, March.
    • Handle: RePEc:taf:ragrxx:v:53:y:2014:i:1:p:46-74
    DOI: 10.1080/03031853.2014.887905
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/03031853.2014.887905
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/03031853.2014.887905?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
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. M. B. Dagut, 1978. "The Economic Effect of the Oil Crisis on South Africa1," South African Journal of Economics, Economic Society of South Africa, vol. 46(1), pages 15-21, March.
    2. Taylor, John B., 2000. "Low inflation, pass-through, and the pricing power of firms," European Economic Review, Elsevier, vol. 44(7), pages 1389-1408, June.
    3. Sherman Robinson & Andrea Cattaneo & Moataz El-Said, 2001. "Updating and Estimating a Social Accounting Matrix Using Cross Entropy Methods," Economic Systems Research, Taylor & Francis Journals, vol. 13(1), pages 47-64.
    4. Jiawen Yang, 1997. "Exchange Rate Pass-Through In U.S. Manufacturing Industries," The Review of Economics and Statistics, MIT Press, vol. 79(1), pages 95-104, February.
    5. Golan, Amos & Judge, George G. & Miller, Douglas, 1996. "Maximum Entropy Econometrics," Staff General Research Papers Archive 1488, Iowa State University, Department of Economics.
    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. Séne, Ligane Massamba, 2014. "Heterogeneous responses to heterogeneous food price shocks in Senegal: insights from a CGE," MPRA Paper 58835, University Library of Munich, Germany.
    2. Hounnou, E. Fèmi & Dedehouanou, Houinsou & Zannou, Afio & Aguey, Segnon & Biaou, Gauthier, 2021. "Effects of Agricultural Public Investments on Economic Growth and Households’ Welfare in Benin: An Applied General Equilibrium Analysis," 2021 Conference, August 17-31, 2021, Virtual 315002, International Association of Agricultural Economists.
    3. Bahta, Yonas Tesfamariam & Groenewald, Johannes Andries, 2015. "The Potential Impact Of A Southern African Common External Tariffs Regime On The Economy Of Lesotho," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 3(2), pages 1-15, April.
    4. Bahta, Yonas Tesfamariam, 2014. "The Impact Of International Oil Price Increase On The Economy Of Free State Province Of South Africa," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 2(1), pages 1-10, January.

    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. Sushanta Mallick & Helena Marques, 2008. "Passthrough of Exchange Rate and Tariffs into Import Prices of India: Currency Depreciation versus Import Liberalization," Review of International Economics, Wiley Blackwell, vol. 16(4), pages 765-782, September.
    2. Jeffrey Frankel & David Parsley & Shang-Jin Wei, 2012. "Slow Pass-through Around the World: A New Import for Developing Countries?," Open Economies Review, Springer, vol. 23(2), pages 213-251, April.
    3. Ramos Carvajal, Carmen & Fernández Vázquez, Esteban, 2002. "Temporal projection of an input-output tables series for the region of Asturias," ERSA conference papers ersa02p211, European Regional Science Association.
    4. Matthieu Bussière & Simona Delle Chiaie & Tuomas A Peltonen, 2014. "Exchange Rate Pass-Through in the Global Economy: The Role of Emerging Market Economies," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 62(1), pages 146-178, April.
    5. Jonathan McCarthy, 2007. "Pass-Through of Exchange Rates and Import Prices to Domestic Inflation in Some Industrialized Economies," Eastern Economic Journal, Eastern Economic Association, vol. 33(4), pages 511-537, Fall.
    6. You, Liangzhi & Wood, Stanley & Wood-Sichra, Ulrike, 2004. "Generating Plausible Crop Distribution Maps For Sub-Sahara Africa Using Spatial Allocation Model," 2004 Annual meeting, August 1-4, Denver, CO 19965, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. Habimana, Olivier, 2016. "Oil price, exchange rate and consumer price co-movement: A continuous-wavelet analysis," MPRA Paper 71886, University Library of Munich, Germany.
    8. Campa, Jose Manuel & Gonzalez Minguez, Jose M., 2006. "Differences in exchange rate pass-through in the euro area," European Economic Review, Elsevier, vol. 50(1), pages 121-145, January.
    9. Raphael A. Auer, 2015. "Exchange Rate Pass‐Through, Domestic Competition, and Inflation: Evidence from the 2005–08 Revaluation of the Renminbi," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 47(8), pages 1617-1650, December.
    10. Mallick, Sushanta & Marques, Helena, 2012. "Pricing to market with trade liberalization: The role of market heterogeneity and product differentiation in India’s exports," Journal of International Money and Finance, Elsevier, vol. 31(2), pages 310-336.
    11. Rich, Jeppe & Mulalic, Ismir, 2012. "Generating synthetic baseline populations from register data," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(3), pages 467-479.
    12. Bahta, Yonas Tesfamariam, 2014. "The Impact Of International Oil Price Increase On The Economy Of Free State Province Of South Africa," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 2(1), pages 1-10, January.
    13. Mallick, Sushanta & Marques, Helena, 2010. "Data frequency and exchange rate pass-through: Evidence from India's exports," International Review of Economics & Finance, Elsevier, vol. 19(1), pages 13-22, January.
    14. You, Liangzhi & Wood, Stanley & Wood-Sichra, Ulrike, 2007. "Generating plausible crop distribution and performance maps for Sub-Saharan Africa using a spatially disaggregated data fusion and optimization approach:," IFPRI discussion papers 725, International Food Policy Research Institute (IFPRI).
    15. Go, Delfin S. & Lofgren, Hans & Ramos, Fabian Mendez & Robinson, Sherman, 2016. "Estimating parameters and structural change in CGE models using a Bayesian cross-entropy estimation approach," Economic Modelling, Elsevier, vol. 52(PB), pages 790-811.
    16. repec:jns:jbstat:v:227:y:2007:i:3:p:295-329 is not listed on IDEAS
    17. Deltas, George & Polemis, Michael, 2019. "Exchange Rate vs Foreign Price Pass-through: Evidence from the European Gasoline Market," MPRA Paper 91698, University Library of Munich, Germany.
    18. Mirdala, Rajmund, 2015. "Exchange Rate Pass-Through in the Euro Area," MPRA Paper 68862, University Library of Munich, Germany.
    19. Hosoe, Nobuhiro, 2014. "Estimation errors in input–output tables and prediction errors in computable general equilibrium analysis," Economic Modelling, Elsevier, vol. 42(C), pages 277-286.
    20. Martins Bitans, 2004. "Pass-Through of Exchange Rates to Domestic Prices in East European Countries and the Role of Economic Enviroment," Working Papers 2004/04, Latvijas Banka.
    21. Sue Wing, Ian, 2008. "The synthesis of bottom-up and top-down approaches to climate policy modeling: Electric power technology detail in a social accounting framework," Energy Economics, Elsevier, vol. 30(2), pages 547-573, March.

    More about this item

    Statistics

    Access and download statistics

    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:taf:ragrxx:v:53:y:2014:i:1:p:46-74. 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: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/ragr20 .

    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.