Pro-Poor Trade Policy in Sub-Saharan Africa

47 Pages Posted: 1 Nov 2011

See all articles by Alessandro Nicita

Alessandro Nicita

United Nations - Conference on Trade and Development (UNCTAD)

Marcelo Olarreaga

University of Geneva; Centre for Economic Policy Research (CEPR)

Guido G. Porto

World Bank; National Bureau of Economic Research (NBER)

Date Written: October 2011

Abstract

The objective of this paper is to estimate the potential pro-poor bias in the existing structure of protection in six countries in Sub-Saharan Africa (SSA) (i.e., whether it redistributes income from rich to poor households). We also explore the extent to which the barriers faced by SSA exporters to the rest of the world are biased in favor of poor or rich households. To this end, we start with a simple agricultural household production model and propose an extension to include adjustments in labor income associated with changes in unskilled and skilled wages. We then build indicators that capture the differences in welfare changes across income levels associated with the elimination of SSA's own trade protection, as well as trade protection on SSA's export bundle by the rest of the world. Results suggest that SSA's own trade policy is biased in favor of poor households. In contrast, the trade policies of SSA's trading partners tend to be biased in favor of SSA's rich households, especially when ad-valorem equivalents of non tariff measures (NTMs) are taken into account.

Keywords: Poverty, Sub-Saharan Africa, Trade policy, Wage elasticities

JEL Classification: F13, F16

Suggested Citation

Nicita, Alessandro and Olarreaga, Marcelo and Porto, Guido, Pro-Poor Trade Policy in Sub-Saharan Africa (October 2011). CEPR Discussion Paper No. DP8594, Available at SSRN: https://ssrn.com/abstract=1952461

Alessandro Nicita (Contact Author)

United Nations - Conference on Trade and Development (UNCTAD) ( email )

Palais des Nations
Office E 8074
Geneva, 1211
Switzerland

Marcelo Olarreaga

University of Geneva ( email )

40 Boulevard du Pont-d'Arve
Genève, CH - 1205
Switzerland

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Guido Porto

World Bank ( email )

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Washington, DC 20433
United States

HOME PAGE: http://econ.worldbank.org/staff/gporto

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

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