1. Poverty and Shared Prosperity Implications of Deep Integration in Eastern and Southern Africa
- Author
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Balistreri, Edward J., Maliszewska, Maryla, Osorio-Rodarte, Israel, Tarr, David G., and Yonezawa, Hidemichi
- Subjects
FOREIGN TRADE ,TRADE LIBERALIZATION ,MARKET ACCESS ,CONCESSIONS ,PREFERENTIAL MARKET ACCESS ,REAL INCOME ,RETURNS TO SCALE ,INVESTMENT ,DOMESTIC PRODUCTION ,TRADE AREA ,FOREIGN INVESTORS ,MARGINAL PRODUCT ,VALUE ADDED ,EQUILIBRIUM ANALYSIS ,LIBERALIZATION OF TRADE ,WORLD TRADE ,TARIFF BARRIERS ,MEASUREMENT ,ELASTICITY OF SUBSTITUTION ,TERMS OF TRADE LOSS ,TERMS OF TRADE ,ELASTICITY OF SUPPLY ,EXPORT MARKETS ,CAPITAL GOOD ,UNEMPLOYMENT ,INCOME ,TRADE NEGOTIATIONS ,STOCK ,TRADE PREFERENCES ,TRADE FACILITATION ,MULTILATERAL LIBERALIZATION ,TARIFF EQUIVALENT ,PER CAPITA INCOME ,DISTRIBUTION ,TRADE AGREEMENTS ,GOODS ,GENERAL EQUILIBRIUM MODELING ,RENT ,MACROECONOMIC MODELS ,TARIFF REDUCTIONS ,TRADE DATA ,ACCESS ,TRADE POLICY ,MACROECONOMIC SHOCKS ,WORLD TRADE ORGANIZATION ,REGULATORY REGIMES ,WELFARE GAINS ,TARIFF ,FOREIGN DIRECT INVESTMENT ,DEVELOPMENT ECONOMICS ,MARKETS ,FOREIGN DIRECT INVESTORS ,GENERAL EQUILIBRIUM ANALYSIS ,MARKET STRUCTURE ,DEVELOPMENT ,PREFERENTIAL TARIFF ,PRICES ,WAGES ,OPEN ECONOMY ,TRADE BARRIERS ,PURCHASING POWER ,UNILATERAL LIBERALIZATION ,OPTIMIZATION ,WELFARE ,UNILATERAL REFORMS ,PRODUCTION ,APPAREL ,TARIFF REDUCTION ,TRADE AGREEMENT ,TRADE INTEGRATION ,ELASTICITY ,CONSUMPTION ,THEORY ,PRICE INDEX ,DEVELOPMENT POLICY ,DISCOUNT RATE ,LIBERALIZATION OF TRADE IN GOODS ,BORDER TRADE ,TRADE ,PREFERENTIAL AGREEMENTS ,EQUILIBRIUM ,MARKET ACCESS OPPORTUNITIES ,PROJECTIONS ,TRADE POLICIES ,MULTILATERAL TRADE REFORM ,PER CAPITA INCOMES ,REGIONAL TRADE INTEGRATION ,MULTILATERAL TRADE ,TRADE REFORMS ,COSTS ,AGGREGATE TRADE ,PREFERENTIAL TRADE AGREEMENTS ,AGRICULTURE ,BENCHMARK EQUILIBRIUM ,FREE TRADE ,ECONOMIC THEORY ,CONSUMERS ,MACROECONOMIC POLICIES ,ECONOMIC INTEGRATION ,WTO ,GDP ,VARIABLES ,FREE TRADE AREA ,CAPITAL ,ECONOMIC GEOGRAPHY ,REGIONAL TRADE ,TRADE REFORM ,POLITICAL ECONOMY ,FOREIGN SUPPLIERS ,PREFERENTIAL TARIFF REDUCTION ,ECONOMIC IMPLICATIONS ,UTILITY ,VALUE ,EXPORTS ,EXTERNAL TRADE ,UNILATERAL TRADE LIBERALIZATION ,GLOBAL TRADE ,UNSKILLED LABOR ,PREFERENTIAL REDUCTION ,SUPPLY CURVES ,GENERAL EQUILIBRIUM MODEL ,TARIFFS ,CUSTOMS UNIONS ,CENTRAL ELASTICITIES ,BENCHMARK ,INTERNATIONAL TRADE ,CAPITAL STOCK ,REGIONAL INTEGRATION ,PREFERENTIAL TRADE LIBERALIZATION ,TELECOMMUNICATIONS ,REDUCTION OF BARRIERS ,REGULATORY BARRIERS ,FREE TRADE AGREEMENTS ,TARIFF BARRIER ,BILATERAL TRADE ,BENCHMARK DATA ,ECONOMIC POLICY ,URUGUAY ROUND ,AGRICULTURAL OUTPUT ,WAGE RATE ,TRADE COSTS ,RETURN ON CAPITAL ,MARKET SHARE ,UNSKILLED WORKERS ,PREFERENTIAL TRADE ,AGRICULTURAL PRODUCTS ,UNILATERAL REDUCTION ,DOMESTIC CONSUMPTION ,IMPERFECT COMPETITION ,PRODUCT DIFFERENTIATION ,IMPORT VALUE ,TRADE DIVERSION ,INPUTS ,PRIMARY FACTORS ,NATURAL RESOURCES ,UNILATERAL TRADE ,AGGREGATE EXPORTS ,MARKET SHARES ,ECONOMIC RESEARCH ,REGIONAL TRADE LIBERALIZATION - Abstract
Evidence indicates that trade costs are a much more substantial barrier to trade than tariffs are, especially in Sub-Saharan Africa. This paper decomposes trade costs into: (i) trade facilitation, (ii) non-tariff barriers, and (iii) the costs of business services. The paper assesses the poverty and shared prosperity impacts of deep integration to reduce these three types of trade costs in: (i) the East African Customs Union–Common Market of East and Southern Africa–South African Development Community "Tripartite" Free Trade Area; (ii) within the East African Customs Union; and (iii) unilaterally by the East African Customs Union. The analysis employs an innovative, multi-region computable general equilibrium model to estimate the changes in the macroeconomic variables that impact poverty and shared prosperity. The model estimates are used in the Global Income Distribution Dynamics microsimulation model to obtain assessments of the changes in the poverty headcount and shared prosperity for each of the simulations for the six African regions or countries. The paper finds that these reforms are pro-poor. There are significant reductions in the poverty headcount and the percentage of the population living in poverty for all six of the African regions from deep integration in the Tripartite Free Trade Area or comparable unilateral reforms by the East African Customs Union. Further, the incomes of the bottom 40 percent of the populations noticeably increase in all countries or regions that are engaged in the trade reforms. The reason for the poor share in prosperity is the fact that the reforms increase unskilled wages faster than the rewards of other factors of production, as the reforms tend to favor agriculture. Despite the uniform increases in income for the poorest 40 percent, there are some cases where the share of income captured by the poorest 40 percent of the population decreases. The estimated gains vary considerably across countries and reforms. Thus, countries would have an interest in negotiating for different reforms in different agreements.
- Published
- 2016