Welfare and Poverty Implications of Global Rice and Agricultural Trade Liberalisation for Pakistan

The objective of the research is to examine the macroeconomic, welfare and poverty effects of global full and partial liberalization in rice trade and agriculture trade in Pakistan. I conducted simulations in a CGE static framework using data from 2002 social accounting matrix. I incorporate both supply and demand side factors affecting Pakistan’s agriculture trade with a focus on rice trade. The results at the macro level suggest that the trade liberalization of rice makes the traditionally inward looking sectors such as agriculture and services more open. However, in the long run it benefit more the most open sector—industry. The results indicate that liberalization of trade in agriculture and rice both benefit to all households especially to farm households in rural area. The welfare and poverty indicators –equivalent variation and FGT indices- improve for majority of households. The results also show that both rice only and agriculture liberalization increase disparity between rich and poor. Pakistan as a whole is better off after all trade shocks. However intensity of shocks differ across five experiments. Global full liberalization of rice trade has more favorable effects in terms of welfare and poverty in the long run.