What Are the Expected Effects of Trade Policies on Poverty in Senegal? A CGE Micro-Macro Analysis

Type Conference Paper - GTAP 16th Annual Conference on Global Economic Analysis
Title What Are the Expected Effects of Trade Policies on Poverty in Senegal? A CGE Micro-Macro Analysis
Publication (Day/Month/Year) 2013
City Shanghai
URL https://www.gtap.agecon.purdue.edu/resources/download/6286.pdf
There is an ongoing debate on the role of trade policies in alleviating poverty. Indeed trade liberalization is supposed to improve economic growth (Dollar and Kraay, 2002; Irwin and Tervio, 2002; Frankel and Romer, 1999). Focusing on poverty alleviation and income inequities, the positive impact of trade is less consensual. Some works have defended the idea that trade integration implies poverty reduction (Bhagwati and Srinivasan, 2002; Dollar and Kraay, 2004; Anderson and Martin, 2005), but most recent surveys have not reached this general conclusion, pointing that the link between trade and poverty can be puzzling (Winters, McCulloh and McKay, 2004; Goldberg and Pavcnik, 2007; Harrison, 2007). According to these surveys, trade policies bring contrasted effects on poverty but region or sector-specific conclusions can be done. In that sense, Goldberg and Pavcnik (2004) have wrote: ”While establishing a clear link between trade liberalization and absolute poverty poses a tremendous challenge, especially in rural areas, documenting the correlation between trade liberalization and certain indicators of urban poverty in the short- or medium-run seems more promising.” This paper aims at assessing the expected effects of trade policies on poverty reduction in Senegal. Especially, the main issue is to point out the distributional effects of trade policies among households, following regional, sectoral, occupational and skills features. Then, our article consists in building a single-CGE model, adapted to poor countries and doing counter-factual micro-simulation analysis to underline the income and distributional effects of tariff-reducing under different scenarios. Thus, in order to match with the Senegalese economy, our CGE-model framework arises from two main issues: treating households heterogeneity and modeling the labor market in order to reflect at the closest a dual-dual economy, that means to distinguish urban from rural sectors and formal from informal activities.

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