GTAP Resources: Resource Display
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"Implications of high commodity prices on poverty reduction in Ethiopia" by Beyene, Lulit Mitik Abstract This research aims at measuring the potential impact of high commodity prices on Ethiopia’s prospects of maintaining agricultural growth objectives set in the CAADP agenda. Furthermore, we aim at measuring the likely impact on the country’s effort and advancement towards attaining the poverty reduction targets. In view of this, we build a CGE model which uses the Dorosh et al (2009) approach as a benchmark and introduce international oil and fertilizer price shocks along with nominal exchange rate devaluation. As for the poverty component, we use the latest household income and consumption expenditure survey. Through a “top-down” approach, each household questioned in HICES 2009/10 is linked directly to the corresponding representative household in the model. The major transmission channel of these simulations is through the increase in intermediate inputs price followed by a drop in factor cost/remunaration. We find that the impact of these shocks is negligible on overall real GDP growth compared to the reference scenario where a 6% agricultural growth is simulated. However, at the sector level, we find that these price shocks combined with devaluation only favor export-intensive agricultural and manufacturing activities while other sectors tend to contract. As for the effect on household income and consumption, we find that world price shocks considered alone are likely to circumvent the poverty reduction efforts achievable under a 6 percent agricultural growth scenario. Poverty incidence increases by as much as 2.8 percentage points in 2014/15. Urban households are more affected by higher world prices. When combining world price shocks with devaluation, we find even higher levels of poverty incidence (4 percentage points). In sum, international oil and fertilizer price changes have a significant impact in Ethiopia as the country is a net importer of those commodities. Despite export gains from a devaluation of the national currency, there is a further... |
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- Dynamic modeling - Economic analysis of poverty - Economic crisis - Economic growth - Domestic policy analysis - Food prices and food security - Africa (East) |
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Public Access  GTAP Resource 4416 (576.0 KB) Replicated: 0 time(s)Restricted Access No documents have been attached. Special Instructions No instructions have been specified. |
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Last Modified: 9/15/2023 2:05:45 PM
