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Textiles Protection and Poverty in South Africa/La protection du secteur des textiles et la pauvreté en Afrique du Sud: une analyse en équilibre général calculable dynamique micro-simulé

Author

Listed:
  • Ramos Mabugu
  • Margaret Chitiga

Abstract

There is an important debate going on in South Africa on whether to apply safeguard trade barriers to protect textiles. This presents an interesting case of how a country might use safeguard trade barriers in order to better achieve a domestic policy objective. Much of the current discourse on textiles protection focuses on static effects of protection. The aim of this paper is to take this discussion a step further by introducing the effect of textiles protection on poverty and its dynamics. To assess these effects of protection, a sequential dynamic computable general equilibrium model linked to a nationally representative household survey of 2000 is used. The simulation involves a doubling of the import tariffs on textiles. The textile sector is, obviously, the biggest winner, followed by the service sector, which sells more than half of its production as inputs for the textile sector. All other sectors experience falling output with the worst affected being the export-oriented sectors. Because the protected sectors are relatively more labour intensive, wages increase in both the short and long terms. Capital returns are sector specific in the short run and go up markedly for textiles and services but decline for all the other sectors. Overall, welfare falls both in the short and long term as the rise in factor prices is completely offset by the increase in consumer prices. The proportion of people living below US$2 per day increases marginally in the short run following increased textiles protection because of the observed increase in consumer price index that is higher than the increase in consumption for most households. Unskilled Indians are the only group to experience a reduction in poverty and welfare increases in the short run. The average poverty gap and the squared poverty gap also follow the same pattern as poverty headcount because most households are being pushed into poverty./L'Afrique du Sud représente un cas idéal pour évaluer la pertinence de mettre en place des barrières commerciales de sauvegarde pour protéger le secteur des textiles. Cette étude évalue les impacts de la protection tarifaire du secteur sud-africain des textiles au moyen d'un modèle d'équilibre général calculable dynamique, de nature séquentielle, lié aux micro données provenant de l'enquête nationale auprès des ménages de 2000. Les résultats de la simulation démontrent que le secteur des textiles est le plus grand bénéficiaire de cette mesure, suivi du secteur des services. Tous les autres secteurs enregistrent une décroissance de leur production et, parmi eux, ceux à vocation exportatrice s'avèrent être les plus sévèrement touchés. Les salaires augmentent à court et à long terme. Le capital étant immobile à court terme entre les secteurs, son rendement augmente sensiblement dans les activités de production des textiles et des services, mais diminue dans les autres activités. Le bien-être diminue à la fois à court et à long terme alors que la pauvreté augmente de façon significative à court terme.

Suggested Citation

  • Ramos Mabugu & Margaret Chitiga, 2006. "Textiles Protection and Poverty in South Africa/La protection du secteur des textiles et la pauvreté en Afrique du Sud: une analyse en équilibre général calculable dynamique micro-simulé," Working Papers MPIA 2007-01, PEP-MPIA.
  • Handle: RePEc:lvl:mpiacr:2007-01
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    File URL: https://portal.pep-net.org/documents/download/id/13521
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    File URL: https://portal.pep-net.org/documents/download/id/13520
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    References listed on IDEAS

    as
    1. François Bourguignon & William H. Branson & Jaime de Melo, 1989. "Macroeconomic Adjustment and Income Distribution: A Macro-Micro Simulation Model," OECD Development Centre Working Papers 1, OECD Publishing.
    2. Nabil Annabi & H. Khondker Bazlul & Selim Raihan & John Cockburn & Bernard Decaluwe, 2005. "Implications of WTO Agreements and Domestic Trade Policy Reforms for Poverty in Bangladesh: Short vs. Long Run," Working Papers MPIA 2005-02, PEP-MPIA.
    3. Nabil Annabi & Fatou Cissé & John Cockburn & Bernard Decaluwé, 2005. "Trade Liberalisation, Growth and Poverty in Senegal: a Dynamic Microsimulation CGE Model Analysis," Working Papers 2005-07, CEPII research center.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Sequential dynamic CGE; microsimulation; textiles; protection; poverty; welfare; growth; South Africa/Équilibre général calculable; MEGC dynamique séquentiel; micro simulation; textiles; protection; pauvreté; bien-être; croissance; Afrique du Sud;

    JEL classification:

    • 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
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • 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
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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