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Micro-macro linkage, Trade

Research notes · Jun 30, 2010

The Growth and Poverty Impacts of Trade Liberalization in Senegal

John Cockburn, Erwin Corong, Bernard Decaluwé, Ismaël Fofana, Véronique Robichaud

Université Laval, Pavillon J-A DeSève, Quebec, Canada; Monash University, Centre of Policy Studies, Clayton, Victoria, Australia

Volume 3(1) Spring 2010

Cite as: J. Cockburn, E. Corong, B. Decaluwé, I. Fofana, V. Robichaud; 2010; The Growth and Poverty Impacts of Trade Liberalization in Senegal; International Journal of Microsimulation; 3(1); 109–113. doi: 10.34196/ijm.00029

Abstract

Most empirical studies find relatively small welfare and poverty impacts of trade liberalization, mainly as a result of the static framework generally used, in which welfare gains and poverty impacts result solely from a short term reallocation of resources. Using Senegal as a case study, we illustrate the results of integrating the growth and productivity gain effects of trade liberalization with the resulting long-run impacts on welfare and poverty. We show that the distributional impacts between poor and non-poor depend upon the specific nature of the trade liberalization policies adopted; and the characteristics of the economy in which it occurs. In the Senegalese case, the predicted principal beneficiaries of trade liberalization are urban and higher skill workers.

This article contains 3 figures and 3 tables.

Figures

Figure 1. Growth incidence curves for Senegal (consumption).
Figure 2. Change in poverty incidence (percent).
Figure 3. Change in poverty measures (in percentage points).

Tables

Table 1. Key characteristics of external trade (percent).
Share Ratio Tariff rates
Value added Imports Exports Imports/ Consumption Exports/ Output
Primary 15.7 19.3 9.3 26.2 8.5 7.1
Industrial 25.7 72.9 54.5 44.4 18.6 16.7
Services 58.6 7.8 36.2 8.4 18.1 0.0
All 100.0 100.0 100.0 30.9 18.4 13.6

Source: Cockburn et al. (2010).

Table 2. Impacts on demand, output and prices (percent).
Volumes Prices
Imports Dom. sales Exports Output Value added Imports Dom. sales Exports Output Value added
Primary 8.4 2.6 18.1 4.3 3.6 −4.4 −3.2 0.0 −4.7 −5.9
Industrial 16.3 0.5 19.8 4.2 5.5 −12.9 −2.3 0.0 −3.6 −4.3
Services 0.3 2.8 15.4 4.4 3.4 1.8 1.5 0.0 −0.5 0.5
TOTAL 13.7 1.8 18.2 4.3 3.9 −10.3 −0.8 0.0 −2.4 −1.8

Source: Cockburn et al. (2010).

Table 3. Impacts on income and rates of return to factors (percent).
Initial share in total income Change in rates of return to factors
Labor income 40.9 −0.4
Total male 28.4 −0.4
Rural 12.1 −2.3
Urban 16.3 1.0
 -unskilled 7.0 −1.2
 -skilled 9.3 3.9
Total female 12.5 −0.8
Rural 4.5 −2.4
Urban 8.0 0.2
 -unskilled 2.3 −1.4
 -skilled 5.7 4.1
Capital 29.7 −3.0
Non-factor income 29.5 −4.3
Total household income 100.0 −2.0
 Consumer price index   −6.7

Source: Cockburn et al. (2010).