Tobacco-free Economy: A SAM-based Multiplier Model to Quantify the Impact of Changes in Tobacco Demand in Bangladesh

Muhammad Jami Husain and Bazlul Haque Khondker
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Muhammad Jami Husain: Muhammad Jami Husain is an economist at the Global Tobacco Control Branch, Office on Smoking and Health, Centers for Disease Control and Prevention, Atlanta, GA, USA, email: MHusain@cdc.gov
Bazlul Haque Khondker: Bazlul Haque Khondker is Professor of Economics, University of Dhaka, Dhaka, Bangladesh, email: bazlul.khondker@gmail.com

Margin: The Journal of Applied Economic Research, 2016, vol. 10, issue 1, 55-85

Abstract: In Bangladesh, where tobacco use is pervasive, reducing tobacco use is economically beneficial. This article uses the latest Bangladesh social accounting matrix (SAM) multiplier model to quantify the economy-wide impact of demand-driven changes in tobacco cultivation, bidi industries and cigarette industries. First, we compute various income multiplier values (i.e., backward linkages) for all production activities in the economy to quantify the impact of changes in demand for the corresponding products on gross output for 86 activities, demand for 86 commodities, returns to 4 factors of production and income for 8 household groups. Next, we rank tobacco production activities by income multiplier values relative to other sectors. Finally, we present three hypothetical ‘tobacco-free economy’ scenarios by diverting demand from tobacco products into other sectors of the economy and by quantifying the economy-wide impact. The simulation exercises with three different tobacco-free scenarios show that, compared to the baseline values, total sectoral output increases by 0.92, 1.3 and 0.75 per cent. The corresponding increases in the total factor returns (i.e., gross domestic product, GDP) are 1.57, 1.75 and 1.75 per cent. Similarly, total household income increases by 1.40, 1.58 and 1.55 per cent. JEL Classification: E1, C6, O2

Keywords: Social Accounting Matrix; Bangladesh SAM; Tobacco Consumption; Tobacco-free Economy; Multiplier Model; Multiplier Values; Input–Output Tables; Demand-driven Interventions (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:sae:mareco:v:10:y:2016:i:1:p:55-85

DOI: 10.1177/0973801015612665

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