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Trade reform and the poor in Morocco: a rural-urban general equilibrium analysis of reduced protection

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  • Lofgren, Hans

Abstract

Morocco is currently about to start reducing industrial protection in the context of its association agreement with the European Union. However, agriculture, which represents the major income source for the disfavored rural population, is the sector that is most strongly protected. In this study, a general equilibrium model of Morocco is used as a laboratory for analyzing the short-run equilibrium effects of alternative scenarios for reduced protection for agriculture and industry. The model, which is calibrated to a Social Accounting Matrix for 1994, is distinguished by an explicit separation of activities, factors, and households into rural and urban. It has a detailed treatment of agricultural and other rural production, the labor market, and households (disaggregated into four types: rural poor, rural non-poor, urban poor, urban non-poor). The simulation results indicate that reduced agricultural protection would generate significant aggregate welfare gains at the same time a significant part of the disadvantaged rural population would lose strongly. The impact of industrial tariff cuts is small. The outcome is less unfavorable for rural households over a slightly longer time frame where labor migration between agriculture, the rest of the rural economy and urban areas is feasible. The results for simulations that introduce compensatory measures targeting the rural population suggest that the dilemma presented by the tradeoff between aggregate and rural welfare can be overcome: in simulations introducing trade liberalization together with government transfers to owners of rainfed agricultural resources, or moderate improvements in rural skill levels or productivity in rural non-agriculture, the gains from trade liberalization are shared relatively evenly among all household groups.

Suggested Citation

  • Lofgren, Hans, 1999. "Trade reform and the poor in Morocco: a rural-urban general equilibrium analysis of reduced protection," TMD discussion papers 38, International Food Policy Research Institute (IFPRI).
  • Handle: RePEc:fpr:tmddps:38
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    File URL: http://www.ifpri.org/sites/default/files/publications/tmdp38.pdf
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    References listed on IDEAS

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    1. Rutherford, Thomas F. & Rutstrom, E.E. & Tarr, David, 1993. "Morocco's free trade agreement with the European community : a quantitative assessment," Policy Research Working Paper Series 1173, The World Bank.
    2. Maurizio Bussolo & David Roland-Holst, 1993. "A Detailed Input-Output Table for Morocco, 1990," OECD Development Centre Working Papers 90, OECD Publishing.
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    Citations

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    Cited by:

    1. Nadia Belhaj Hassine & Veronique Robichaud & Bernard Decaluwé, 2010. "Agricultural Trade Liberalization, Productivity Gain and Poverty Alleviation: A General Equilibrium Analysis," Working Papers 519, Economic Research Forum, revised 05 Jan 2010.
    2. repec:ksp:journ2:v:5:y:2018:i:1:p:12-21 is not listed on IDEAS
    3. Dawood Mamoon & Syed Mansoob Murshed, 2013. "Education bias of trade liberalization and wage inequality in developing countries," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 22(4), pages 572-604, June.
    4. Nicolas Hérault, 2004. "Un modèle d'équilibre général calculable (MEGC) pour évaluer les effets de l'ouverture au commerce international : le cas de l'Afrique du Sud," Documents de travail 102, Groupe d'Economie du Développement de l'Université Montesquieu Bordeaux IV.
    5. Mouna Cherkaoui & Ayache Khellaf & Abdelaziz Nihou, 2011. "The Price Effect of Tariff Liberalization in Morocco: Measuring the Impact on Household Welfare," Working Papers 637, Economic Research Forum, revised 10 Jan 2011.
    6. Mamoon, Dawood & Murshed, S. Mansoob, 2011. "Labour Markets, Education and Duality of Returns," MPRA Paper 29529, University Library of Munich, Germany.
    7. Dawood MAMOON, 2018. "Skilled-unskilled wage asymmetries as an outcome of skewed international trade patterns in the South," Turkish Economic Review, KSP Journals, vol. 5(1), pages 65-82, March.
    8. Dawood Mamoon, 2015. "How May International Trade affect Poverty in a Developing Country Setup? The Inequality Channel," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 3(5), pages 230-244, May.
    9. Bittencourt, Maurício Vaz Lobo & Kraybill, David S. & Larson, Donald W., 2006. "Consequences Of Trade Liberalization On Poverty And Income Distribution In Brazil," 2006 Annual meeting, July 23-26, Long Beach, CA 21128, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    10. Alemayehu Geda, 2006. "Openness, Inequality and Poverty in Africa," Working Papers 25, United Nations, Department of Economics and Social Affairs.
    11. Dawood Mamoon, 2006. "Which Institutions Are More Relevant Than Others in Inequality Mitigation?," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 45(4), pages 893-912.
    12. Mamoon, Dawood, 2001. "What May Constitute an Equal Society? Addressing Externalities of Globalization:," MPRA Paper 77335, University Library of Munich, Germany.
    13. Dawood MAMOON, 2018. "Globalization, political orientation and wage inequality: From Donald Trump’s election to Angela Merkal’s re-election," Turkish Economic Review, KSP Journals, vol. 5(1), pages 12-21, March.
    14. Agenor, Pierre-Richard & Aynaoui, Karim El, 2003. "Labor market policies and unemployment in Morocco : a quantitative analysis," Policy Research Working Paper Series 3091, The World Bank.

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