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Is Increased Agricultural Protection Beneficial for South Africa?

Margaret Chitiga () and Ramos Mabugu
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Margaret Chitiga: Department of Economics, University of Pretoria

Authors registered in the RePEc Author Service: Margaret Mabugu

No 200717, Working Papers from University of Pretoria, Department of Economics

Abstract: This paper focuses on the effects that a higher tariff on agriculture and food imports could have on poverty and the macroeconomy using a top down computable general equilibrium microsimulation model. This question is of broader relevance to developing countries that may be contemplating the use of World Trade Organisation permissible trade barriers so as to achieve a domestic policy objective. Generally speaking, the results suggest that doubling protection of agriculture and food would lead to a reallocation of labour toward the sectors with high initial protection and those with high domestic orientation. Agriculture and food sectors are harmed by increased protection if the government chooses to use indirect tax rates to compensate for revenue changes because of induced demand contraction by the indirect tax adjustment. Exports and imports in general decline. The analysis also shows that increasing food and agricultural protection has very negligible but negative effects on welfare and poverty.

Keywords: CGE model; microsimulation, trade policy, special and differential treatment, poverty, welfare, South Africa (search for similar items in EconPapers)
JEL-codes: D33 D58 E27 F17 I32 O15 O55 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2007-09
New Economics Papers: this item is included in nep-afr, nep-agr, nep-cmp, nep-dev and nep-int
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