Inequality and Poverty Impacts of Trade Distortions in Mozambique

Although Mozambique has considerable agricultural potential, rural poverty remains extremely high. This paper examines the extent to which global and domestic price distortions affect agricultural production and national poverty. The author develop...

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Bibliographic Details
Main Authors:	Arndt, Channing, Thurlow, James
Format:	Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2017
Subjects:	AGRICULTURAL COMMODITIES AGRICULTURAL ECONOMICS AGRICULTURAL EXPORT AGRICULTURAL EXPORTS AGRICULTURAL GOODS AGRICULTURAL GROWTH AGRICULTURAL IMPORTS AGRICULTURAL INCENTIVES AGRICULTURAL LAND AGRICULTURAL MARKETS AGRICULTURAL POLICY AGRICULTURAL PRICE AGRICULTURAL PROCESSING AGRICULTURAL PRODUCTION AGRICULTURAL PRODUCTIVITY AGRICULTURAL PRODUCTS AGRICULTURAL SECTOR AGRICULTURAL SECTORS AGRICULTURAL TECHNOLOGY AGRICULTURAL TRADE AGRICULTURAL TRADE LIBERALIZATION AGRICULTURAL VALUE AGRICULTURE AGRICULTURE INDUSTRY BEVERAGES BILL CAPITAL GOODS CAPITAL INTENSITY CAPITAL RETURNS CASHEWS CASSAVA CENTRAL PLANNING CEREALS CIVIL WAR COMMODITIES COMMODITY COMPARATIVE ADVANTAGE COMPETITIVENESS CONSTANT RETURNS TO SCALE CONSUMER PRICE INDEX CONSUMER SPENDING CONSUMPTION EXPENDITURE CORPORATE TAX COST OF CAPITAL COST OF INVESTMENT COTTON CROPS CURRENT ACCOUNT DEMAND CURVES DEPRECIATING EXCHANGE RATE DEPRECIATION DEVELOPING COUNTRIES DEVELOPING COUNTRY DISTORTIONS DIVIDENDS DOMESTIC DEMAND DOMESTIC GOODS DOMESTIC PRICE ECONOMIC GROWTH ECONOMIC LIFE ECONOMIC PERFORMANCE ECONOMIC SITUATION ECONOMIC STRUCTURE ELASTICITY ELASTICITY OF DEMAND ELASTICITY OF SUBSTITUTION EXCHANGE RATE EXCHANGE RATE INCREASES EXPANSION OF EXPORTS EXPORT EXPORT COMPETITIVENESS EXPORT EARNINGS EXPORT SECTORS EXPORT SUBSIDY EXPORTS EXTERNAL BALANCE FACTORS OF PRODUCTION FARM FARM PRODUCTS FARMERS FISCAL DEFICIT FLEXIBLE EXCHANGE RATE FOOD CROP FOOD IMPORTS FOOD POLICY FOOD POLICY RESEARCH FOOD PRICES FOOD PROCESSING FOOD PRODUCTS FOREIGN CURRENCY FOREIGN DIRECT INVESTMENT FOREIGN INVESTMENT FOREIGN MARKETS FOREIGN OWNERSHIP FRUITS FULL LIBERALIZATION GDP GENERAL EQUILIBRIUM GENERAL EQUILIBRIUM ANALYSIS GINI COEFFICIENT GLOBAL MARKETS GOVERNMENT INTERVENTION GOVERNMENT INVOLVEMENT GRAIN GRAIN TRANSPORT GROUNDNUTS HOUSEHOLDS IFPRI IMPORT IMPORT DEMAND IMPORT PRICES IMPORT TARIFFS IMPORTS INCOME INCOMES INEQUALITY MEASURES INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE INTERNATIONAL MARKETS INTERNATIONAL TRADE INVESTMENT DEMAND LABOR MARKETS LEVEL OF INVESTMENT LEVY LIBERALIZATIONS LIVESTOCK LOCAL CURRENCY MACROECONOMIC BALANCE MACROECONOMIC SIMULATION MAIZE MARGINAL COST MARGINAL REVENUE MARKET ECONOMY MARKET PRICES MEAT MEAT PROCESSING MILLING NATIONAL INCOME NATURAL RESOURCES NOMINAL DEPRECIATION NOMINAL WAGE OUTPUT PENSIONS PESTICIDES POULTRY POVERTY REDUCTION PRICE DISTORTIONS PRICE INDEX PRICE OF SUGAR PRIMARY PRODUCTS PRIVATE CONSUMPTION PROCESSED FOODS PROFIT MAXIMIZATION RAPID GROWTH REAL APPRECIATION REAL EXCHANGE RATE REAL GDP REAL INVESTMENT REFORM PROGRAM REGIONAL MARKETS RELATIVE PRICES REMITTANCES RURAL AREAS RURAL INFRASTRUCTURE SAVINGS SKILLED WORKERS SMALL COUNTRY SMELTING SUGAR SUGAR PROCESSING SUGAR SECTORS SUGARCANE SUPPLY RESPONSE SURPLUS SURPLUSES TARIFF REDUCTIONS TAX TAX RATE TAX RATES TAX REVENUES TAXATION TEA TOTAL EXPORTS TOTAL IMPORTS TRANSACTIONS COSTS TUBERS VALUE ADDED VEGETABLES VOLUME WAGES WHEAT WORLD DEMAND WORLD PRICE WORLD PRICES WORLD TRADE
Online Access:	http://documents.worldbank.org/curated/en/239561468060918537/Inequality-and-poverty-impacts-of-trade-distortions-in-Mozambique http://hdl.handle.net/10986/28176

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Summary:	Although Mozambique has considerable agricultural potential, rural poverty remains extremely high. This paper examines the extent to which global and domestic price distortions affect agricultural production and national poverty. The author develops a computable general equilibrium (CGE) and micro-simulation model of Mozambique that is linked to the results of a global model. This framework is used to examine the effects of eliminating global and national price distortions. Model results indicate that agriculture is adversely affected by current trade distortions due to policies in the rest of the world. While a removal of all merchandise trade distortions will reduce import prices, it will also raise agricultural production and reduce poverty. By contrast, removing only agricultural price distortions abroad will have little effect on Mozambique's agricultural sector. Model results indicate that Mozambique's own distortions are also biased against agriculture, with producers of processed agricultural products enjoying high protection levels. Removing these distortions causes a significant expansion of agricultural Gross Domestic Product (GDP) and a reduction in both poverty and inequality. The findings therefore suggest that removing own-country and rest-of-world distortions will have positive implications for agriculture and for the overall economy in Mozambique, and in particular it will reduce its poverty and inequality.

Inequality and Poverty Impacts of Trade Distortions in Mozambique

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