Agricultural trade liberalization and poverty in Tunisia: macro-simulation in a general equilibrium framework

Abstract

Will exposure to world agricultural prices generate more poverty or less? To what extent will households be affected by changes in agricultural trade polices? Do multilateral agricultural liberalization matter more than bilateral changes? Results of simulations using a computable general equilibrium (CGE) model linked to household survey data suggest that trade liberalization has only modest effects on the level of GDP, but it has a substantial effect in reducing poverty. Moreover, the combined effect of global and domestic liberalization is more pro-poor than the effect of domestic liberalization alone. As a net importer of agricultural commodities, Tunisia may be expected to experience terms-of-trade losses from higher world agricultural prices. However, and because Tunisia has significant agricultural import protection, we would expect the agricultural sector to lose from trade liberalization that would remove this protection.