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Citation Information

Type Conference Paper - Northwest Universities Development Consortium Conference (NEUDC)
Title Welfare and Poverty Impacts of Policy Reforms in Bangladesh: A General Equilibrium Approach
Author(s)
Publication (Day/Month/Year) 2004
City HEC Montreal
Country/State Canada
URL http://neumann.hec.ca/neudc2004/fp/raihan_selim_sept_15.pdf
Abstract
Our study assesses the impacts of different policy reforms, such as, domestic trade liberalisation, implementation of WTO agreements in textile and apparel sector and WTO negotiations of service liberalisation, such as, free movement of natural persons and examines their welfare and poverty implications for the economy of Bangladesh. We use a comparative static computable general equilibrium (CGE) model based on 1995-96 Social Accounting Matrix (SAM) of the Bangladesh economy. The 1995-96 SAM of Bangladesh is characterised by 26 production sectors, 7 factors of production and 7 household groups. The household groups differ with respect to employment status, income levels and expenditure patterns. Since poverty outcomes are manifested and measured at the household level, we concentrate on how the meso-environment facing the households, particularly the poor households, is affected by these policy reforms. The direct effect of trade liberalisation through the price channel depends on how changes in prices of importables due to tariff changes, affect the prices faced by households of the imported commodities and get transmitted to other commodities as well. On the other hand, implementation of WTO agreements for textile and apparels (T&A) and thus phasing out of MFA regime from January 2005 will likely to affect the prices of T&A in the international market and, therefore, may affect the volume of export of Bangladesh ready-made garments (RMG), which may have important impact on poverty and welfare of the households in Bangladesh. Finally, if free movements of natural persons are allowed, which is an agenda for many developing countries under the WTO negotiations, it may raise the remittances for the Bangladesh economy significantly, which may have important poverty and welfare implications.

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