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Does trade liberalization enhance income growth and equity in Zimbabwe? The Role of Complementary Policies

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  • Bautista, Romeo M.
  • Lofgren, Hans
  • Thomas, Marcelle

Abstract

Using an agriculture-focused CGE model for Zimbabwe with 1991 as base period, this paper examines quantitatively the income and equity effects of trade liberalization in isolation and in conjunction with potentially complementary changes in fiscal and land policies. Trade policy reform alone (dismantling of import and foreign exchange controls, and reduction of import taxes to a low uniform rate) is shown to increase aggregate disposable household income significantly. However, the least income gain accrues to smallholder farm households, which account for about four-fifths of the poor in Zimbabwe, so the equity impact is unfavorable. Concurrent implementation with specific changes in government expenditure and tax policies and two alternative stylized land redistribution schemes yields differing outcomes in terms of aggregate household income growth and its distribution.

Suggested Citation

  • Bautista, Romeo M. & Lofgren, Hans & Thomas, Marcelle, 1998. "Does trade liberalization enhance income growth and equity in Zimbabwe? The Role of Complementary Policies," TMD Discussion Papers 97552, CGIAR, International Food Policy Research Institute (IFPRI).
    • Handle: RePEc:ags:iffp23:97552
    DOI: 10.22004/ag.econ.97552
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    1. International Monetary Fund, 1997. "Zimbabwe: Recent Economic Developments," IMF Staff Country Reports 1997/059, International Monetary Fund.
    2. Jaime de Melo & Sherman Robinson, 2015. "Trade Policy And Resource Allocation In The Presence Of Product Differentiation," World Scientific Book Chapters, in: Modeling Developing Countries' Policies in General Equilibrium, chapter 16, pages 357-365, World Scientific Publishing Co. Pte. Ltd..
    3. Christopher Delgado & Peter Hazell & Jane Hopkins & Valerie Kelly, 1994. "Promoting Intersectoral Growth Linkages in Rural Africa Through Agricultural Technology and Policy Reform," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(5), pages 1166-1171.
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    2. Margaret Chitiga & Tonia Kandiero & Ramos Mabugu, 2005. "Computable General Equilibrium Micro-Simulation Analysis of the Impact of Trade Policies on Poverty in Zimbabwe," Working Papers MPIA 2005-01, PEP-MPIA.
    3. Nesongano, Talent, 2022. "Analysis of the Impact of Trade Liberalization on the Zimbabwean Economy: A case of the African Continental Free Trade Area (AfCFTA)," Conference papers 333399, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    4. Margaret Chitiga & Ramos Mabugu & Tonia Kandiero, 2007. "The impact of tariff removal on poverty in Zimbabwe: A computable general equilibrium microsimulation," Journal of Development Studies, Taylor & Francis Journals, vol. 43(6), pages 1105-1125.
    5. Jean, Sebastien & Laborde, David & Martin, William J., 2005. "Sensitive Products: Selection and Implications for Agricultural Trade Negotiations," Working Papers 18860, TRADEAG - Agricultural Trade Agreements.

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