Sectoral Strategy and Poverty: The Case of Togo

PEP MPIA Working Paper No. 2011-02

38 Pages Posted: 23 Apr 2011 Last revised: 11 Jul 2018

See all articles by Akoete Ega Agbodji

Akoete Ega Agbodji

Université de Lomé

Koffi Yovo

Université de Lomé

Kodjo Abalo

University of Lome

Komlan Dodzi Agbodji

Independent

Ablamba Ahoefavi Johnson

Government of Togo - Ministry of Cooperation, Development and Regional Planning

Date Written: January 1, 2011

Abstract

A general calculable equilibrium model, calibrated using the 2000 SAM, was developed to analyze the possible effects of an external price shock and the effects of a sectoral investment strategy on the distribution of income in Togo in the context of the PRSP. Analysis of the SAM was used to highlight the importance of food production in the creation and distribution of income in Togo. This sector contributes 20% of the country’s value added, 67 percent of which is paid to informal labour in the form of wages. Given that poverty is most prevalent in rural areas, where there is a 74.3 percent incidence of poverty as opposed to 36.8 percent for urban areas, it is reasonable for the government to make improved productivity and the creation and distribution of wealth in rural areas a national priority. The effects of a ten percent increase in capital in both food and cash crop farming are as follows: (i) an increase in value added and production, along with a decrease in agricultural prices; (ii) improved price-competitiveness for the economy; (iii) an increase in final consumption and net exports, resulting in an expansion of GDP; (iv) an increase in real wages for informal labour, which is heavily used in the agricultural sector, along with lower wages in the formal sector; and (v) higher real income and welfare for households. This analysis thus confirms that increasing investment in agriculture, particularly for food crops, could improve the distribution of income and welfare in rural areas. Moreover, the simulation of a ten percent increase in export prices for cash crops, textiles, and fats and oils reveals non negligible macroeconomic and sectoral effects as well as improved welfare.

Keywords: Poverty, government strategies, CGE models

JEL Classification: I32, I38, C68

Suggested Citation

Agbodji, Akoete Ega and Yovo, Koffi and Abalo, Kodjo and Agbodji, Komlan Dodzi and Johnson, Ablamba Ahoefavi, Sectoral Strategy and Poverty: The Case of Togo (January 1, 2011). PEP MPIA Working Paper No. 2011-02. Available at SSRN: https://ssrn.com/abstract=1816427 or http://dx.doi.org/10.2139/ssrn.1816427

Akoete Ega Agbodji (Contact Author)

Université de Lomé ( email )

Togo

Koffi Yovo

Université de Lomé ( email )

Lomé
Togo

Kodjo Abalo

University of Lome ( email )

Lome
Togo

Komlan Dodzi Agbodji

Independent ( email )

No Address Available

Ablamba Ahoefavi Johnson

Government of Togo - Ministry of Cooperation, Development and Regional Planning ( email )

Lomé
Togo

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