Trade Liberalisation, Growth and Poverty in Senegal: A Dynamic Microsimulation Cge Model Analysis

CIRPEE Working Paper No. 05-12

31 Pages Posted: 15 May 2005 Last revised: 16 Jul 2018

See all articles by Nabil Annabi

Nabil Annabi

Université Laval - Département d'Économique

Fatou Cissé

Université Cheikh Anta Diop

John Cockburn

Partnership for Economic Policy (PEP); Université Laval; Partnership for Economic Policy (PEP)

Bernard Decaluwe

Université Laval - Département d'Économique

Date Written: May 1, 2005

Abstract

Much current debate focuses on the role of growth in alleviating poverty. However, the majority of computable general equilibrium (CGE) models used in poverty and inequality analysis are static in nature. The inability of this kind of model to account for growth (accumulation) effects makes them inadequate for long run analysis of the poverty and inequality impacts of economic policies. They exclude accumulation effects and do not allow the study of the transition path of the economy where short run policy impacts are likely to be different from those of the long run. To overcome this limitation we use a sequential dynamic CGE microsimulation model that takes into account accumulation effects and makes it possible to study poverty and inequality through time. Changes in poverty are then decomposed into growth and distribution components in order to examine whether de-protection and factor accumulation are pro-poor or not.

The model is applied to Senegalese data using a 1996 social accounting matrix and a 1995 survey of 3278 households. The main findings of this study are that trade liberalisation induces small increases in poverty and inequality in the short run as well as contractions in the initially protected agriculture and industrial sectors. In the long run, it enhances capital accumulation, particularly in the service and industrial sectors, and brings substantial decreases in poverty. However, a decomposition of poverty changes shows that income distribution worsens, with greater gains among urban dwellers and the non-poor.

Keywords: Dynamic CGE model, trade liberalisation, poverty, inequality, Senegal

JEL Classification: D33, D58, E27, F17, I32, O15, O55

Suggested Citation

Annabi, Nabil and Cissé, Fatou and Cockburn, John and Decaluwe, Bernard, Trade Liberalisation, Growth and Poverty in Senegal: A Dynamic Microsimulation Cge Model Analysis (May 1, 2005). CIRPEE Working Paper No. 05-12. Available at SSRN: https://ssrn.com/abstract=721522 or http://dx.doi.org/10.2139/ssrn.721522

Nabil Annabi (Contact Author)

Université Laval - Département d'Économique ( email )

Quebec
Canada

Fatou Cissé

Université Cheikh Anta Diop ( email )

B.P. 5005
Dakar-Fann 16996
Senegal

John Cockburn

Partnership for Economic Policy (PEP) ( email )

P.O. Box 30772-00100
ICIPE - Duduville Campus, Kasarani
Nairobi
Kenya

Université Laval ( email )

Dept. of Economics
Québec, Quebec G1V 0A6
Canada

Partnership for Economic Policy (PEP) ( email )

Duduville Campus, Kasarani
P.O. Box 30772-00100
Nairobi
Kenya

Bernard Decaluwe

Université Laval - Département d'Économique ( email )

2325 Rue de l'Université
Ste-Foy, Quebec G1K 7P4 G1K 7P4
Canada
418-656-5561 (Phone)
418-656-7798 (Fax)

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