Evaluating Poverty Impacts of Globalization and Trade Policy Changes on Agricultural Producers

The poverty effects and in particular the impact of trade liberalization on smallholder livestock producers in African and South East Asian developing countries (Malawi, Zambia, Uganda, Mozambique, Vietnam, Bangladesh, Indonesia, and Philippines) is addressed by disaggregating income sources within agriculture into earnings from crop and livestock production. Given that livestock production in our developing country sample is a marginal activity with very little concentration households are stratified according to a small dependence on livestock earnings, and thus separating them from crops specialized earnings households, households who are wage labor specialized, transfer dependent households, and diversified households. We combine a macro-economic framework based on a Computable General Equilibrium global model, with a micro-economic follow-up simulation drawing on information contained in eight countries’ household surveys. In the assessment of poverty impacts of global trade liberalization we find significant cross-country differences between the short and long run. For all countries in our sample, with the exception of Philippines in the short run and Zambia in the long run (no change), the national headcount measure of poverty is reduced after trade liberalization. We provide an in-depth look at poverty changes in one of these economies – Malawi – where a substantial portion of the population is engaged in small-holder agriculture. The differential effects by stratum and the distributional welfare impact along the income distribution constitute a significant resource for policy makers concerned about the impact of trade liberalization on the agriculture sector and more specifically on livestock activities.