1. Agricultural Distortions, Poverty, and Inequality in South Africa
- Author
-
Hérault, Nicolas and Thurlow, James
- Subjects
EXPORT SUBSIDIES ,IMPORT DEMAND ,BEVERAGES ,COMMERCIAL AGRICULTURE ,RURAL DEVELOPMENT ,WORLD TRADE ,EXPORT SECTOR ,FOOD POLICY ,AGRICULTURAL LAND ,FISCAL DEFICIT ,WAGE DIFFERENTIALS ,FOOD POLICY RESEARCH ,FRUITS ,UNEMPLOYMENT ,INCOME ,EXPORT GROWTH ,AGRICULTURAL SUPPORT ,IMPORT ,COST OF INVESTMENT ,REMOTE REGIONS ,DISPOSABLE INCOME ,COMPETITIVENESS ,AGRICULTURAL WAGES ,WORLD DEVELOPMENT INDICATORS ,MACROECONOMIC SIMULATION ,CONSUMER PRICE INDEX ,PER CAPITA INCOME ,TRADE AGREEMENTS ,CAPITAL INCOME ,WORLD PRICE ,CONSTANT RETURNS TO SCALE ,REAL EXCHANGE RATE ,SKILLED WORKERS ,IMPORT TARIFF ,SUGAR ,REAL EXPORTS ,TRADE BARRIERS ,PROFIT MAXIMIZATION ,VEGETABLES ,AGRICULTURAL COMMODITIES ,DOWNWARD PRESSURE ,AGRICULTURAL POLICIES ,FRUIT ,INCOME INEQUALITY ,ELASTICITY ,INCOME TAXES ,SLOWDOWN ,POVERTY REDUCTION ,WORLD DEMAND ,PRIVATE SAVINGS ,RURAL LIVELIHOODS ,TAX RATE ,FOOD PROCESSING ,MARKET PRICES ,GDP ,EMPLOYMENT STATUS ,UTILITY FUNCTION ,MACROECONOMIC STABILITY ,POLITICAL ECONOMY ,SMALLHOLDER FARMERS ,INCOME TAX ,EXPORTS ,FOREIGN MARKETS ,GENERAL EQUILIBRIUM MODEL ,CURRENT ACCOUNT BALANCE ,ECONOMETRICS ,UNEMPLOYMENT RATE ,INTERNATIONAL TRADE ,EXCHANGE RATE ,AGRICULTURAL PRICES ,FARM PRODUCTS ,DOMESTIC DEMAND ,FULL LIBERALIZATION ,CAPITAL GOODS ,WHEAT ,SUGAR REFINING ,SUGARCANE ,COMMODITY PRICES ,DEVELOPING COUNTRIES ,ECONOMIC STRUCTURE ,GLOBAL MARKETS ,REAL GDP ,IMPORT PRICES ,POVERTY LINES ,AGRICULTURAL GROWTH ,REAL APPRECIATION ,CEREALS ,ANIMAL FEEDS ,POVERTY ALLEVIATION ,REAL EXCHANGE RATE APPRECIATION ,TOTAL IMPORTS ,RURAL ,INCOME ELASTICITIES ,POVERTY LINE ,SHEEP MEAT ,EXPORT COMPETITIVENESS ,INVESTMENT SPENDING ,FACTORS OF PRODUCTION ,EXPORT PERFORMANCE ,MAIZE ,FLEXIBLE EXCHANGE RATE ,FOREIGN TRADE ,TRADE LIBERALIZATION ,ECONOMIC PERFORMANCE ,TAX RATES ,TAX ,REAL IMPORTS ,DEMOGRAPHIC ,GENERAL EQUILIBRIUM ,GROSS DOMESTIC PRODUCT ,LIVESTOCK PRODUCTION ,ELASTICITY OF SUBSTITUTION ,DOMESTIC PRICE ,COMMODITY ,DEPRECIATION ,RURAL HOUSEHOLDS ,BEEF ,POOR ,AGRICULTURAL PRODUCTION ,TRADABLE GOODS ,HOUSEHOLD WELFARE ,FOOD PRICES ,INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE ,DRIED FRUIT ,IMPORT TARIFFS ,LEGUMES ,GINI COEFFICIENT ,FOOD ITEMS ,TRADE POLICY ,TOTAL EXPORT ,COMMERCIAL FARMS ,GRAINS ,SUGAR PRODUCTS ,WORLD TRADE ORGANIZATION ,PRICE OF EXPORTS ,PROCESSED FOODS ,TAX STRUCTURE ,AGRICULTURAL LIBERALIZATION ,TRADE DEFICIT ,WAGES ,CONFECTIONERY ,RURAL AREAS ,RURAL POVERTY ,WORLD PRICES ,LABOR MARKET ,DECISION MAKING ,RURAL WORKERS ,NATIONAL ECONOMY ,RELATIVE PRICES ,SMALL COUNTRY ,CONSUMER SPENDING ,APARTHEID ,TRADE POLICIES ,AGRICULTURAL POLICY ,INEQUALITY ,TRADE REFORMS ,RURAL INCOMES ,RESERVE BANK ,CONSUMPTION EXPENDITURE ,AGRICULTURE ,BAKERY PRODUCTS ,DIVIDENDS ,PRIVATE CONSUMPTION ,STRUCTURAL ADJUSTMENT ,FOREIGN EXCHANGE ,IRRIGATION ,PRODUCTION FUNCTIONS ,NOMINAL WAGE ,DOMESTIC GOODS ,INCOME DISTRIBUTION ,NATIONAL POVERTY ,MEAT ,PRODUCT MARKETS ,INCOME SHARES ,INVESTMENT DEMAND ,MEATS ,CURRENT ACCOUNT ,TOTAL EXPORTS ,AGRICULTURAL SECTOR ,DAIRY ,NOMINAL WAGES ,HOUSEHOLD INCOME ,AGRICULTURAL OUTPUT ,IMPORTS ,CAPITAL RETURNS ,EXPORT EARNINGS ,AGRICULTURAL WORKERS ,COMMODITY MARKETS ,LEVEL OF INVESTMENT ,EXPORT SECTORS ,POOR HOUSEHOLDS ,AGRICULTURAL PRODUCTS ,FOOD PRODUCTS ,LIBERALIZATIONS ,JOB CREATION ,PRICE DISTORTIONS ,DISPOSABLE INCOMES ,LABOR FORCE ,TRADE SHOCK ,SAVINGS ,DOMESTIC PRICES ,FOREIGN CURRENCY ,OILS & FATS - Abstract
South Africa has rapidly reduced trade barriers since the end of Apartheid, yet agricultural production and exports have remained sluggish. Also, poverty and unemployment have risen and become increasingly concentrated in rural areas. This paper examines the extent to which remaining price distortions, both domestic and foreign, are contributing to the underperformance of the agricultural sector vis-a-vis the rest of the economy. The author draws on a computable general equilibrium (CGE) and micro-simulation model of South Africa that is linked to the results of a global trade model. This framework is used to examine the effects of eliminating global and domestic price distortions. Model results indicate that South Africa's agricultural sector currently benefits from global price distortions, and that removing these will create more jobs for lower-skilled workers, thereby reducing income inequality and poverty. The author also fined that South Africa's own policies are biased against agriculture and that removing domestic distortions will raise agricultural production. Job losses in nonagricultural sectors will be outweighed by job creation in agriculture, such that overall employment rises and poverty falls. Overall, the findings suggest that South Africa's own policies are more damaging to its welfare, poverty and inequality than distortionary policies in the rest of the world. Existing national price distortions may thus explain some of the poor performance of South Africa's agricultural sector and rural development.
- Published
- 2009