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The Poverty Impacts of the Doha Round in Cameroon: the Role of Tax Policy

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  • Christian Arnault Emini
  • John Cockburn
  • Bernard Decaluwe

Abstract

The aim of this chapter is to assess the possible impacts of the Doha round of negotiations on poverty in Cameroon. During the recent period of economic recovery, Cameroon has enjoyed a sharp decline in poverty with the headcount index falling from 53.3 percent of inhabitants in 1996 to 40.2 percent in 2001, mostly thanks to economic growth rather than redistribution. Will the current trade negotiations under the Doha Round reinforce or curb this trend? We apply a CGE microsimulation model which involves 10,992 households in order to address this question. The Doha Round is found to be poverty reducing for Cameroon. For the whole country, the estimate of net number of people who are lifted out of poverty is 22,000 following this scenario. Further investigations indicate that more ambitious world trade liberalization leads to greater poverty alleviation at the national level, while Cameroon's domestic trade liberalization has adverse poverty and inequality impacts - despite giving rise to higher aggregate welfare. Under the Doha scenario, the cuts in Cameroon's tariffs in the Doha scenarios are very small (the average tariff rate moves from 11.79 percent in the base run to merely 11.66 percent) so that ROW liberalization effects on world prices more than offset the adverse own liberalization effects in this scenario. If the Rest of the World (ROW) and Cameroon full trade liberalizations are combined, the adverse impacts of own liberalization outweigh the favourable outcomes of the ROW liberalizations. Our results suggest furthermore that the choice of tax replacement instrument canhaave an important bias in poverty impacts: poverty gets worse in our country-case study when using an imperfect VAT instead of a neutral replacement tax to compensate lost tariff revenue, and gets even worse when using consumption tax. Key reasons here are the Chapter 12 in Putting Development Back into the Doha Agenda: Poverty Impacts of a WTO Agreement, Thomas W. Hertel and L. Alan Winters (eds) forthcoming from the World Bank, Washington, DC.

Suggested Citation

  • Christian Arnault Emini & John Cockburn & Bernard Decaluwe, 2005. "The Poverty Impacts of the Doha Round in Cameroon: the Role of Tax Policy," Working Papers MPIA 2005-04, PEP-MPIA.
  • Handle: RePEc:lvl:mpiacr:2005-04
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    References listed on IDEAS

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    1. Dollar, David & Kraay, Aart, 2002. "Growth Is Good for the Poor," Journal of Economic Growth, Springer, vol. 7(3), pages 195-225, September.
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    Cited by:

    1. Behrman, Jere R., 2009. "Analyzing the Distributional Impact of Reforms, Volume Two: A Practitioner's Guide to Pension, Health, Labor Market, Public Sector Downsizing, Taxation, Decentralization, and Macroeconomic Modeling. A," Journal of Pension Economics and Finance, Cambridge University Press, pages 396-397.
    2. Sami Bibi & John Cockburn & Ismaël Fofana & Luca Tiberti & Paul Ningaye & Christian Arnault Emini, 2010. "Impacts of the Global Economic Crisis on Child Poverty in Cameroon and Options for a Policy Response," Papers inwopa598, Innocenti Working Papers.
    3. Thomas W. Hertel & Roman Keeney & Maros Ivanic & L. Alan Winters, 2007. "Distributional effects of WTO agricultural reforms in rich and poor countries," Economic Policy, CEPR;CES;MSH, vol. 22, pages 289-337, April.
    4. Sami Bibi & John Cockburn & Christian Arnault Emini & Luca Tiberti & Ismaël Fofana & Paul Ningaye, 2010. "Incidences de la crise economique mondiale de 2008/09 et des options de la politique de reponse sur la pauvreté des enfants au Cameroun," Papers inwopa600, Innocenti Working Papers.
    5. Anonymous, 2009. "Journal of International Agricultural Trade and Development, Volume 5, Issue 1," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 5(1).
    6. Louhichi, Kamel, 2012. "Impact of EU biofuel policies on the French arable sector: A micro-level analysis using global market and farm-based supply models," Revue d'Etudes en Agriculture et Environnement, Editions NecPlus, pages 233-272.
    7. AfDB AfDB, 2006. "Working Paper 86 - A Review of Ex - ante Poverty Impact Assessments of Macroeconomic Policies in Cameroon and Ghana," Working Paper Series 2220, African Development Bank.
    8. International Monetary Fund, 2006. "Central African Economic and Monetary Community; Selected Issues," IMF Staff Country Reports 06/309, International Monetary Fund.
    9. Christian Zamo-Akono & Roger Tsafack Nanfosso, 2013. "Private Returns to Education in Urban Cameroon," Business and Economic Research, Macrothink Institute, pages 23-37.
    10. Alia, Didier & Ndjana, Willy & Nghogue, Erith, 2009. "Construction d'un MEGC pour l'évaluation de l'impact de la politique économique au Cameroun sur le secteur informel et la pauvreté
      [Evaluation of the effects of economic policies on informal sector
      ," MPRA Paper 30339, University Library of Munich, Germany.
    11. Paolo Giordano & Kun Li, 2012. "An Updated Assessment of the Trade and Poverty Nexus in Latin America," IDB Publications (Working Papers) 79119, Inter-American Development Bank.
    12. AfDB AfDB, 2006. "Working Paper 86 - A Review of Ex - ante Poverty Impact Assessments of Macroeconomic Policies in Cameroon and Ghana," Working Paper Series 2300, African Development Bank.
    13. Aline Coudouel & Stefano Paternostro, 2006. "Analyzing the Distributional Impact of Reforms : A Practitioner’s Guide to Pension, Health, Labor Markets, Public Sector Downsizing, Taxation, Decentralization, and Macroeconomic Modeling, Volume 2," World Bank Publications, The World Bank, number 7041.
    14. Essama-Nssah, , B. & Bassol3, Leandre & Paul, Saumik, 2010. "Accounting for heterogeneity in growth incidence in Cameroon," Policy Research Working Paper Series 5464, The World Bank.
    15. Walkenhorst, Peter & Cattaneo, Olivier, 2006. "Trade, Diversification and Growth in Nigeria," MPRA Paper 23735, University Library of Munich, Germany.
    16. Essama-Nssah, B., 2005. "The poverty and distributional impact of macroeconomic shocks and policies : a review of modeling approaches," Policy Research Working Paper Series 3682, The World Bank.
    17. Essama-Nssah, B. & Bassole, Leandre, 2010. "A counterfactual analysis of the poverty impact of economic growth in Cameroon," Policy Research Working Paper Series 5249, The World Bank.
    18. Hertel, Thomas W. & Winters, L. Alan, 2005. "Poverty impacts of a WTO agreement : synthesis and overview," Policy Research Working Paper Series 3757, The World Bank.
    19. Paolo Giordano & Kun Li, 2012. "An Updated Assessment of the Trade and Poverty Nexus in Latin America," IDB Publications (Working Papers) 4209, Inter-American Development Bank.

    More about this item

    Keywords

    Computable General Equilibrium; Microsimulation; International Trade; Poverty; Cameroon;

    JEL classification:

    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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