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Maize Trade Liberalization vs. Fertilizer Subsidies in Tanzania: A CGE Model Analysis with Endogenous Soil Fertility




This paper presents an analysis on economy-environmental interlinkages for Tanzania by using a computable general equilibrium (CGE) model based on a social accounting matrix. The purpose of the analysis is to include general equilibrium effects when evaluating two suggested policy measures meant to stimulate growth and crop production. The model is multisectoral with a particular focus on crop producing sectors and soil mining processes. Maize trade liberalization and a fertilizer subsidy are considered. The model simulations show that both policy reforms have expansive effects and that there are significant sectoral complementarities between agriculture and non-agriculture in Tanzania. Fertilizer subsidies promotes cash crop production and a more land intensive production pattern in agriculture, while a maize trade liberalization stimulates food crops and a more land extensive agriculture. Fertilizer subsidies are found to imply far more expansive effects than a trade liberalization does. Only minor differences are identified between the two policy reforms as concerning their impact on the balance of trade, distribution and the environment.

Suggested Citation

  • Sverre Grepperud & Henrik Wiig & Finn Roar Aune, 1999. "Maize Trade Liberalization vs. Fertilizer Subsidies in Tanzania: A CGE Model Analysis with Endogenous Soil Fertility," Discussion Papers 249, Statistics Norway, Research Department.
  • Handle: RePEc:ssb:dispap:249

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    References listed on IDEAS

    1. Alfsen, Knut H. & Bye, Torstein & Glomsr D, Solveig & Wiig, Henrik, 1997. "Soil degradation and economic development in Ghana," Environment and Development Economics, Cambridge University Press, vol. 2(02), pages 119-143, May.
    2. Persson, Annika & Munasinghe, Mohan, 1995. "Natural Resource Management and Economywide Policies in Costa Rica: A Computable General Equilibrium (CGE) Modeling Approach," World Bank Economic Review, World Bank Group, vol. 9(2), pages 259-285, May.
    3. Dercon, Stefan, 1993. "Peasant Supply Response and Macroeconomic Policies: Cotton in Tanzania," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 2(2), pages 157-194, October.
    4. Glomsr D, Solveig & Monge, Maria Dolores & Vennemo, Haakon, 1999. "Structural adjustment and deforestation in Nicaragua," Environment and Development Economics, Cambridge University Press, vol. 4(01), pages 19-43, February.
    5. Robinson, Sherman, 1989. "Multisectoral models," Handbook of Development Economics,in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 2, chapter 18, pages 885-947 Elsevier.
    6. Alfsen, Knut H. & De Franco, Mario A. & Glomsrod, Solveig & Johnsen, Torgeir, 1996. "The cost of soil erosion in Nicaragua," Ecological Economics, Elsevier, vol. 16(2), pages 129-145, February.
    7. Repetto, Robert, 1987. "Economic Incentives for Sustainable Production," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 21(3), pages 44-59, November.
    8. Lipumba, Nguyuru & Ndulu, Benno & Horton, Sue & Plourde, Andre, 1988. "A supply constrained macroeconometric model of Tanzania," Economic Modelling, Elsevier, vol. 5(4), pages 354-376, October.
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    More about this item


    CGE-model; soil fertility; trade reform; agricultural subsidy.;

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land

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