Agricultural Distortions, Poverty and Inequality in South Africa
South Africa has rapidly reduced trade barriers since the end of Apartheid, yet agricultural production and exports have remained sluggish. Also, poverty and unemployment have risen and become increasingly concentrated in rural areas. This paper examines the extent to which remaining price distortions, both domestic and foreign, are contributing to the underperformance of the agricultural sector vis-à-vis the rest of the economy. We draw on a computable general equilibrium (CGE) and micro-simulation model of South Africa that are linked to the results of a global trade model. This framework is used to examine the effects of eliminating global and domestic price distortions. Model results indicate that South Africa’s agricultural sector currently benefits from global price distortions, and that removing these would create more jobs for lower-skilled workers, thereby reducing income inequality and poverty. We also find that South Africa’s own policies are biased against agriculture and that removing domestic distortions would raise agricultural production. Job losses in nonagricultural sectors would be outweighed by job creation in agriculture, such that overall employment rises and poverty falls. Overall, our findings suggest that South Africa’s own policies are more damaging to its welfare, poverty and inequality than distortionary policies in the rest of the world. Existing national price distortions may thus explain some of the poor performance of South Africa’s agricultural sector and rural development.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kym Anderson & Peter Lloyd & Donald Maclaren, 2007.
"Distortions to Agricultural Incentives in Australia Since World War II,"
The Economic Record,
The Economic Society of Australia, vol. 83(263), pages 461-482, December.
- Kym Anderson & Peter Lloyd & Donald MacLaren, 2007. "Distortions to Agricultural Incentives in Australia Since World War II," Centre for International Economic Studies Working Papers 2007-01, University of Adelaide, Centre for International Economic Studies.
- Anderson, Kym & Lloyd, Peter & MacLaren, Donald, 2008. "Distortions to agricultural incentives in Australia since world war II," Policy Research Working Paper Series 4471, The World Bank.
- Anderson, Kym & Lloyd, Peter J & Maclaren, Donald, 2007. "Distortions to Agricultural Incentives in Australia Since World War II," CEPR Discussion Papers 6436, C.E.P.R. Discussion Papers.
- By Gunnar Jonsson & Arvind Subramanian, 2001. "Dynamic Gains from Trade: Evidence from South Africa," IMF Staff Papers, Palgrave Macmillan, vol. 48(1), pages 1-8.
- Arvind Subramanian & Gunnar Jonsson, 2000. "Dynamic Gains From Trade; Evidence From South Africa," IMF Working Papers 00/45, International Monetary Fund.
- L Edwards, 2001. "Globalisation And The Skills Bias Of Occupational Employment In South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 69(1), pages 40-71, 03.
- Kym Anderson & Will Martin, 2009. "Distortions to Agricultural Incentives in Asia," World Bank Publications, The World Bank, number 2611, September.
- Anderson, Kym & Martin, William J., 2007. "Distortions to Agricultural Incentives in Asia," Agricultural Distortions Working Paper 48557, World Bank.
- Kym Anderson & William A. Masters, 2009. "Distortions to Agricultural Incentives in Africa," World Bank Publications, The World Bank, number 2607, September.
- Anderson, Kym & Masters, William A., 2007. "Distortions to Agricultural Incentives in Africa," Agricultural Distortions Working Paper 48554, World Bank.
- Daniela Casale & Colette Muller & Dorrit Posel, 2004. "'Two Million Net New Jobs': A Reconsideration Of The Rise In Employment In South Africa, 1995-2003," South African Journal of Economics, Economic Society of South Africa, vol. 72(5), pages 978-1002, December.
- Nicolas Herault, 2007. "Trade Liberalisation, Poverty and Inequality in South Africa: A Computable General Equilibrium-Microsimulation Analysis," The Economic Record, The Economic Society of Australia, vol. 83(262), pages 317-328, 09.
- Johann Kirsten & Julian May & Sheryl Hendriks & Charles L. Machethe & Cecelia Punt & Mike Lyne, 2007. "South Africa," Chapters,in: Beyond Food Production, chapter 8 Edward Elgar Publishing.
- Nick Vink & Gavin Williams & Johann Kirsten, 2004. "South Africa," Chapters,in: The World's Wine Markets, chapter 12 Edward Elgar Publishing.
- Valenzuela, Ernesto & Kym Anderson, 2009. "Alternative Agricultural Price Distortions for CGE Analysis of Developing Countries, 2004 and 1980-84," GTAP Research Memoranda 2925, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
- Valenzuela, Ernesto & Wong, Sara & Sandri, Damiano, 2007. "Distortions to Agricultural Incentives in Ecuador," Agricultural Distortions Working Paper 48394, World Bank.
- Kirsten, Johann F. & Edwards, Lawrence & Vink, Nick, 2007. "Distortions to Agricultural Incentives in South Africa," Agricultural Distortions Working Paper 48514, World Bank. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:ags:wbadwp:52792. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.