Doha Scenarios, Trade Reforms, and Poverty in the Philippines : A Computable General Equilibrium Analysis

Since the early 1980s the Philippines has undertaken substantial trade reform. The current Doha Round of World Trade Organization (WTO) negotiations is now likely to bring further reform and shocks to world import prices and export demand. The impact of all these developments on the poor is not very...

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Main Authors:	Cororaton, Caesar B., Cockburn, John, Corong, Erwin
Format:	Publications & Research
Language:	English
Published:	World Bank, Washington, DC 2012
Online Access:	http://documents.worldbank.org/curated/en/2005/10/6318939/doha-scenarios-trade-reforms-poverty-philippines-computable-general-equilibrium-analysis http://hdl.handle.net/10986/8637

id	okr-10986-8637
recordtype	oai_dc
spelling	okr-10986-86372021-04-23T14:02:43Z Doha Scenarios, Trade Reforms, and Poverty in the Philippines : A Computable General Equilibrium Analysis Cororaton, Caesar B. Cockburn, John Corong, Erwin Since the early 1980s the Philippines has undertaken substantial trade reform. The current Doha Round of World Trade Organization (WTO) negotiations is now likely to bring further reform and shocks to world import prices and export demand. The impact of all these developments on the poor is not very clear and is the subject of intense debate. The authors use a detailed economywide computable general equilibrium (CGE) model to run a series of policy experiments. They find that poverty increases slightly with the implementation of the prospective Doha scenario. These effects are focused primarily among rural households in the wake of falling world prices and demand for the Philippines' agricultural exports. The authors find that the impacts of full liberalization-involving free world trade and complete domestic liberalization-depend strongly on the mechanism the government adopts to offset forgone tariff revenue. If an indirect tax is used, the incidence of poverty falls marginally, but the depth (poverty gap) and severity (squared poverty gap) increase substantially. If, instead, an income tax is used, all measures of poverty increase. In both cases, full liberalization favors urban households, as exports, which are primarily nonagricultural, expand. In separate simulations, the authors discover that free world trade is poverty reducing and favors rural households, whereas domestic liberalization is poverty increasing and favors urban households. Under free world trade, rural households benefit from increasing world agricultural demand. The anti-rural bias of domestic liberalization stems from the fact that import prices fall more for agricultural goods than for industrial goods, as initial import-weighted average tariff rates are higher for the former. In conclusion, the current Doha agreement appears likely to slightly increase poverty, especially in rural areas and among the unemployed, self-employed, and rural low-educated. The Philippines is found to have an interest in pushing for more ambitious world trade liberalization, as free world trade holds out promise for reducing poverty. 2012-06-21T15:09:00Z 2012-06-21T15:09:00Z 2005-10 http://documents.worldbank.org/curated/en/2005/10/6318939/doha-scenarios-trade-reforms-poverty-philippines-computable-general-equilibrium-analysis http://hdl.handle.net/10986/8637 English Policy Research Working Paper; No. 3738 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper East Asia and Pacific Philippines
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
geographic_facet	East Asia and Pacific Philippines
relation	Policy Research Working Paper; No. 3738
description	Since the early 1980s the Philippines has undertaken substantial trade reform. The current Doha Round of World Trade Organization (WTO) negotiations is now likely to bring further reform and shocks to world import prices and export demand. The impact of all these developments on the poor is not very clear and is the subject of intense debate. The authors use a detailed economywide computable general equilibrium (CGE) model to run a series of policy experiments. They find that poverty increases slightly with the implementation of the prospective Doha scenario. These effects are focused primarily among rural households in the wake of falling world prices and demand for the Philippines' agricultural exports. The authors find that the impacts of full liberalization-involving free world trade and complete domestic liberalization-depend strongly on the mechanism the government adopts to offset forgone tariff revenue. If an indirect tax is used, the incidence of poverty falls marginally, but the depth (poverty gap) and severity (squared poverty gap) increase substantially. If, instead, an income tax is used, all measures of poverty increase. In both cases, full liberalization favors urban households, as exports, which are primarily nonagricultural, expand. In separate simulations, the authors discover that free world trade is poverty reducing and favors rural households, whereas domestic liberalization is poverty increasing and favors urban households. Under free world trade, rural households benefit from increasing world agricultural demand. The anti-rural bias of domestic liberalization stems from the fact that import prices fall more for agricultural goods than for industrial goods, as initial import-weighted average tariff rates are higher for the former. In conclusion, the current Doha agreement appears likely to slightly increase poverty, especially in rural areas and among the unemployed, self-employed, and rural low-educated. The Philippines is found to have an interest in pushing for more ambitious world trade liberalization, as free world trade holds out promise for reducing poverty.
format	Publications & Research
author	Cororaton, Caesar B. Cockburn, John Corong, Erwin
spellingShingle	Cororaton, Caesar B. Cockburn, John Corong, Erwin Doha Scenarios, Trade Reforms, and Poverty in the Philippines : A Computable General Equilibrium Analysis
author_facet	Cororaton, Caesar B. Cockburn, John Corong, Erwin
author_sort	Cororaton, Caesar B.
title	Doha Scenarios, Trade Reforms, and Poverty in the Philippines : A Computable General Equilibrium Analysis
title_short	Doha Scenarios, Trade Reforms, and Poverty in the Philippines : A Computable General Equilibrium Analysis
title_full	Doha Scenarios, Trade Reforms, and Poverty in the Philippines : A Computable General Equilibrium Analysis
title_fullStr	Doha Scenarios, Trade Reforms, and Poverty in the Philippines : A Computable General Equilibrium Analysis
title_full_unstemmed	Doha Scenarios, Trade Reforms, and Poverty in the Philippines : A Computable General Equilibrium Analysis
title_sort	doha scenarios, trade reforms, and poverty in the philippines : a computable general equilibrium analysis
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/2005/10/6318939/doha-scenarios-trade-reforms-poverty-philippines-computable-general-equilibrium-analysis http://hdl.handle.net/10986/8637
_version_	1764407842220015616

Doha Scenarios, Trade Reforms, and Poverty in the Philippines : A Computable General Equilibrium Analysis

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