Agricultural trade liberalization and poverty in China

The overall goal of this paper is to examine the impacts of trade liberalization on China's agriculture, in general, and poverty, in particular. The impacts on agriculture are analyzed by commodity and by region. Because different farmers (especially those in different income brackets) produce diverse sets of commodities, the main part of our paper analyzes the effects on households and their implications for the poverty through the simulation of household production and consumption changes in response to the trade-induced market prices changes on a disaggregated (by province), household-level basis. The results of our analysis lead to the conclusion that, unlike fears expressed in the popular press and by some scholars, the positive impacts of trade liberalization are actually greater than the negative ones. Although other effects on the rural economy from trade liberalization of other subsectors (such as textiles) may be equally large or even larger, this study's focus on the agricultural sector shows that there will be an impact from agricultural trade liberalization and that the net impact is positive for the average farm household in China. However, policymakers still need to be concerned. Not all households and not all commodities will be treated equally. Our findings show that poorer households, especially those in the provinces in the western parts of China, will be hurt. The main reason is that the farmers in Western China are currently producing commodities that are receiving positive rates of protection, rates of protection that will fall with additional trade liberalization. Hence, if policy makers want to minimize the impacts, there needs to be an effort to minimize the effect on these households either by direct assistance or by eliminating constraints that are keeping households from becoming more efficient by shifting their production more towards those commodities that will benefit from trade liberalization.     

Trade Opening,Fiscal Reforms,Poverty, and Inequality: A CGE Analysis for Bangladesh

We assess the short‐ and long‐run impacts of tariff reform policies on Bangladeshi households' poverty and income distribution by developing an 86‐sector, four‐factor, and nine‐household‐group computable general equilibrium (CGE) model. The main findings are that the complete removal of tariffs leads to a decrease in overall poverty with rich household groups in a relatively better position. In the short run poverty incidence increases for rural landless, urban illiterate, and low‐educated household groups whereas rural large farmer and urban medium household groups enjoy improvements in all poverty indicators. In terms of income distribution, trade liberalization enhances inequality slightly, but there is a tendency towards more equitable distribution in the long run. The choice of a fiscal compensatory mechanism with consumption tax is likely to play a negative role in terms of poverty and inequality in the short run; however, interestingly, the results are pro‐poor in the long run.     

Trade liberalization and income inequality: The case for Pakistan

Trade liberalization policies have been adopted by many developing countries to increase economic growth and reduce poverty. While the positive relationship between trade liberalization and economic growth is generally well accepted, the impact of trade liberalization on poverty and income inequality is still unclear. The objective of this paper is to use real data and real trade agreements of the state of Pakistan, to examine the predictions made by trade models about the impact of trade liberalization on income inequality. To illustrate, the impacts of several alternative bilateral and regional free trade agreements are simulated on household income and income inequality in Pakistan. The results show that trade liberalization does not always lead to a decline in income inequality in the short run. Trade agreements that do improve income equality, favor agriculture and often hinge on a decline in urban and non-farm household income. In the long run, changes in income equality are more positive, suggesting that efforts might best be applied towards improving the mobility of labor and capital.     

Robust Estimates of Changes in Poverty and Inequality in Post‐Independence Namibia

We estimate changes in the distribution of household consumption expenditure in Namibia since independence in 1990 and the effects on poverty. To produce comparability between two household surveys, we use survey‐matching techniques, and we apply the framework of stochastic dominance to test the robustness of our results. The results reveal a significant decrease in the poverty headcount over the period and small but insignificant decreases in the country's extremely high levels of inequality. Decomposition analysis shows that poverty reduction in Namibia is largely driven by growth in mean incomes rather than redistribution. Even so, there have been important changes in inequality among different social groups especially as educational attainment has replaced ethnicity as the main determinant of between‐group inequality.     

Trade policy impacts under alternative land market regimes in rural China

In this paper we apply a simulation model of a village economy in Guizhou province, China, to assess impacts of trade reform at the household and the village level under alternative land market regimes. Putting special emphasis on the modeling of household migration a trade reform scenario is simulated with and without the existence of a land rental market in the village.Significant impacts of the land market on the policy outcome regarding household production, income and welfare are found. The possibility to trade land within the village leads to increasing specialization into agriculture and migration among the households as a response to the policy shock. In a situation with a land market, incomes of households which expand agricultural production are less negatively affected by trade reform than incomes of households which migration more.At the village level, a land market does not influence the poverty outcome of the reform but reduces its inequality enhancing impact. Village migration and exports of agricultural outputs increase.     

Exchange rate volatility and agricultural trade under policy reforms in South Africa

Decades of government intervention have helped develop the South African agriculture sector to its present state. Policy reforms have included trade and exchange rate policies to increase the country's international competitiveness, reduce poverty and promote economic growth. These reforms are facilitating the growth in agricultural trade and South Africa's reintegration into the global economy. Annual agricultural exports and imports have increased. This paper uses annual data and a vector error-correction model to investigate the supply and demand relationships for agricultural trade flows in South Africa during the past four decades. The results show that prices, real exchange rates, domestic production capacity and real incomes have significant impacts on the country's agricultural trade. In particular, exchange rate volatility has negative impacts. This cannot be viewed solely as an exogenous source of macroeconomic instability in South Africa, as domestic policies play a crucial role in influencing the movement of exchange rates.     

Anti-dumping Policies and International Portfolio Allocation: The View from the Global Funds

Anti-dumping policies, as one of the most important nontariff measures to protect a country's economic interests, can have an impact not only on a country's trade and social welfare, but also on capital flows. Anti-dumping measures can result in increased trade costs and alterations to exchange rate risk. This study investigates the impact of anti-dumping sanctions on the international portfolio allocations of global funds. Antidumping policies can decrease the proportion of a fund's investment portfolio allocated to recently-sanctioned countries. Closer trade ties between the sanctioned country and the country where a fund is domiciled exacerbate the divestiture, but stronger foreign direct investment links weaken the negative association. Some country and fund heterogeneities are also discussed. We find that more developed countries are less affected by the impact of anti-dumping measures on equity fund allocations; liberalization of the economy and stable government could also mitigate the negative impact of anti-dumping sanctions. High-risk funds, such as growth funds or funds that invest in leveraged buyouts, showed the greatest response to changes in anti-dumping regulations.     

Who is Better Off from Trade Liberalization? An Experience from Urban China*

Empirical studies have found that the skill wage gap (difference between wages earned by skilled and unskilled workers) narrowed in the case of the ‘Four Asian Dragons’ as they underwent trade liberalization during the 1960s and 1970s, whereas the gap widened in most of the Latin American countries after they liberalized their economies in the 1980s. China's integration into the world economy since 1978 has been used to explain this phenomenon, but few formal studies have been carried out in China regarding the effects of trade liberalization on the skill wage gap because of the limited availability of data. The present study uses unique household surveys conducted in ten provinces of China in 1988 and 1995 to study this issue. Results show that trade liberalization that occurred in China between 1988 and 1995 was responsible for an average increase of 28.73 yuan (approximately 20 percent of the total increase) in average monthly wages. However, trade liberalization significantly widened the urban skill wage gap in China by introducing an increase in income only for those who had 13 years or more of education (at least junior high school graduates). Interestingly, import liberalization also only benefited those who had more than 9 years of schooling; whereas export liberalization brought wage increases for people with 7–12 years of education. Finally, those with specific production skills from technical schools, rather than those with several years of general education, were mostly favored in the labor market in China between 1988 and 1995.     

Trade Liberalization,Economic Restructuring and Urban Poverty: The Case of China*

Increased trade openness and rapid market-oriented transformation have largely altered the patterns of wealth accumulation and wealth distribution in post-reform China. In the present paper, with the help of Chinese provincial level data over the period of 1986 to 2000, simultaneous equations estimation and generalized method of moment techniques are applied to investigate the relationship between trade and poverty in urban China. Empirical results suggest that China's trade liberalization helps to reduce urban poverty both directly and indirectly through its favorable impacts on economic growth.     

Poverty,Vulnerability and Social Protection in a Period of Crisis: The Case of Indonesia

Before the financial crisis of mid-1997, estimates of consumption poverty in Indonesia were based on rather modest poverty line thresholds when seen in relation to estimates of capability poverty. The reasons behind this discrepancy are identified and alternative estimates of consumption poverty for the pre-crisis period proposed. During the crisis, the behavior of consumption poverty can be described as transient in nature and is relevant in understanding the notion of vulnerability, that is, the risk that individuals and households can experience temporary episodes of poverty. Vulnerability could have worsened, however, in the absence of government intervention, entailing macroeconomic stabilization measures and social protection initiatives. Based on this experience, a fiscally sustainable social safety net, that is able to reinforce household coping mechanisms and social capital, is recommended as part of the country's medium-term strategy to combat poverty.     

Individual preferences on trade liberalization: evidence from a Japanese household survey

This paper studies an individual’s preference on trade liberalization using a Japanese household survey, the Keio Household Panel Survey. As a result, we show that preferences toward trade liberalization are affected by economic factors (income, gender, family, asset, and job status) as well as noneconomic factors (noncognitive factors and behaviroal biases). We find that male, educated, and people with smaller family prefer trade liberalization. Furthermore, people who prefer liberty to equality and have less local patriotism, tend to be positive to trade liberalization.

     

A comprehensive economic partnership between India and Japan: Impact,prospects and challenges

This paper examines the benefits and challenges of the 2011 Comprehensive Economic Partnership Agreement (CEPA) between India and Japan, specifically the ways to maximize gains from their complementary economies, trade and FDI relations. It also measures the partnership's economy-wide impact empirically, and its role in regional and global integration. An analysis of the trade intensity indices shows that the bilateral trade flow is small considering the other country's importance in world trade, suggesting the existence of great potential for improving trade relations. The computable general equilibrium (CGE) analysis of the economy wide impact of the CEPA suggests that tariff reductions will create a marginal increase in output growth for both India and Japan as compared to the business as usual scenario. In terms of the effect on exports, India's exports to Japan would increase more than those of Japan to India while positive net welfare gains are expected for both countries as a result of trade liberalization. This is in contrast to the study by Ahmed (2010), which finds welfare gains only for Japan, not for India. Furthermore, one of the striking results of the paper is that Japan will not reduce its heavy reliance on the Chinese market, though India will. In general, India, compared to Japan, will gain more, if CEPA materializes by 2020. Japan too will have welfare gains in spite of opening up the agriculture sector with 100% tariff reduction by 2020. Both countries need to accelerate structural reforms to remove the border barriers in addition to reducing tariffs, in order to reap maximum benefit of their economic partnership.     

Study of the Measurement and Determinants of Intra‐industry Trade in East Asia*

The present paper investigates the development of intra‐industry trade (IIT) among the East Asian economies over the 1970–1996 period. A dynamic index is used to capture the changes in the structure of trade flows. Based on this approach, IIT is decomposed into horizontal (HIIT) and vertical components (VIIT) and the determinants of each are investigated. The results show that both HIIT and VIIT have exhibited increased importance over the sample period in manufacturing. Using pooled panel data the two‐way trade in all measures of IIT is found to be positively related to the country‐specific variables, such as the market size, exhange rate depreciation, the levels of development and income, and negatively to the geographic proximity of the partners. Economies of scale are seen to have a positive influence on IIT and HIIT, but a negative relationship with VIIT. Although the relative openness of a country's trade regime shows no significant relationship with any form of IIT, a trade imbalance does affect IIT and HIIT flows. The findings have implications for assessing the structural adjustment costs associated with the trade liberalization process as HIIT is associated with demand for variety and relates to two‐way trade in goods of similar quality, while VIIT is driven by international specialization and differences in relative factor endowments.     

Assessing the Impact of Agricultural Technology Adoption on Farmers' Well‐being Using Propensity‐Score Matching Analysis in Rural China

The present paper assesses the impact of improved upland rice technology on farmers' well‐being. The study uses propensity‐score matching to address the problem of ‘self‐selection,’ because technology adoption is not randomly assigned. It applies this procedure to household survey data collected in Yunnan, China in 2000, 2002 and 2004. The findings indicate that improved upland rice technology has a robust and positive effect on farmers' well‐being, as measured by income levels and the incidence of poverty. The effect of technology on well‐being shows a diminishing impact on producers' incomes. This implies that newer innovations are continuously needed to replace older technologies that have reached their saturation points.     

Decomposing inequality and poverty in post-war Rwanda: The roles of gender,education, wealth and location

This paper provides an overview of poverty and inequality in post-war Rwanda. Rwanda is one of the poorest countries in the world, and has recently become one of the most unequal. High levels of poverty and inequality have important implications not only in terms of evaluations of social welfare, but also for management of social tensions and the propensity for violent conflict in the future. This paper uses the first two available and nationally representative rounds of household surveys –EICV1 2000 and EICV2 2005 – to decompose and identify the major ‘sources' of poverty and inequality in the country. I find stark differences in vulnerability to poverty by region, gender and widow status of the head of household. I additionally find important changes in the ‘income generating functions' of Rwandan households, and that distribution of land and financial assets are increasingly important in determining the inter-household distribution of income.     

Fleshing out the olive? Observations on income polarization in China since 1981

In a rare example of a national goal for income distribution besides reducing poverty (for which there is a broad consensus), China's leadership committed in 2021 to attaining a less polarized “olive-shaped” distribution. The paper argues that the Foster-Wolfson polarization curve and index are well suited to quantifying this goal. New estimates indicate that polarization has been on a rising trend since 1981, but with a de-polarizing reversal emerging around 2009. There is no robust time-series evidence of polarizing effects of economic growth, poverty reduction or population urbanization. Larger urban-rural gaps in mean incomes have been strongly polarizing.     

Dairy farming,cooperatives and livelihoods: lessons learned from six indian villages

India's dairy sector has emerged as the world's largest dairy producer and has enabled 70 million farmers to generate income through its rapid growth. This success is linked to broad national policy support through the Operation Flood program and the emergence of an inclusive model of cooperatives. However, the informal sector is still the marketing channel most used by dairy producers, and with the liberalization of the dairy sector, the cooperative model is also facing competition from the private sector. By surveying 244 dairy farmers in two major but heterogeneous states in India, this paper examines the inclusiveness of the sector and the impact of dairy cooperative membership on farmers’ income and livelihood. The originality of the paper concerns its systematic perspective on households’ assets and activities. The results indicate that cooperative membership is associated with caste membership and farmers collection centers. Better incomes are associated with membership, particularly among farmers with less land and among smallholders, who are more dependent on their dairy income to lift themselves out of poverty.     

Born to be different: The role of local political leaders in poverty reduction in China

By incorporating imprinting theory into a political–economic framework, this paper studies the role of local political leaders in poverty reduction. Exploiting exogenous turnovers of city-level party secretaries in China, I find that city secretaries with early-life poverty experiences are more likely to increase the incomes of poor families in their jurisdictions. I further find that the effect of city secretaries' poverty experiences on the income of the poor is more pronounced in the counties that are not officially categorized as impoverished by the central government and among the families living above the poverty line set by the Chinese government but below the international poverty line proposed by the World Bank. It is suggested that local political leaders affect poverty reduction outcomes by instilling their personal preferences, which can be shaped by their early experiences, into their economic decisions.     

Do International Remittances Affect Poverty in Africa?*

Abstract: International remittances flowing into developing countries are attracting increasing attention because of their rising volume and their impact on recipient countries. This paper uses a panel data set on poverty and international remittances for African countries to examine the impact of international remittances on poverty reduction in 33 African countries over the period 1990–2005. We find that international remittances—defined as the share of remittances in country GDP—reduce the level, depth, and severity of poverty in Africa. But the size of the poverty reduction depends on how poverty is being measured. After instrumenting for the possible endogeneity of international remittances, we find that a 10 percent increase in official international remittances as a share of GDP leads to a 2.9 percent decline in the poverty headcount or the share of people living in poverty. Also, the more sensitive poverty measures—the poverty gap (poverty depth) and squared poverty gap (poverty severity)—suggest that international remittances will have a similar impact on poverty reduction. The point estimates for the poverty gap and squared poverty gap suggest that a 10 percent increase in the share of international remittances will lead to a 2.9 percent and 2.8 percent decline, respectively, in the depth and severity of poverty in African countries. Regardless of the measure of poverty used as the dependent variable, income inequality (Gini index) has a positive and significant coefficient, indicating that greater inequality is associated with higher poverty in African countries, much in conformity with the literature. Similar results were obtained for trade openness. In the same vein, per capita income has a negative and significant effect on each measure of poverty used in the study. Our results also show that inflation rates positively and significantly affect poverty incidence, depth and severity in Africa. In all three poverty measures, the dummy variable for sub‐Saharan Africa is strongly positive, and strongly negative for North Africa. The policy implications of these results are discussed.     

On the Relative Well-Being of the Nonmetropolitan Poor: An Examination of Alternate Definitions of Poverty during the 1990s

Using Foster-Greer-Thorbecke poverty indices, this paper shows that although the incidence of poverty was higher in nonmetropolitan than metropolitan areas throughout the 1990s, the poverty-gap index was only statistically significantly higher in nonmetropolitan areas in six of the 10 years, and the squared poverty-gap index was worse in only three years. This paper also provides design-corrected standard errors for the indices, which result in more than doubling the uncorrected estimates. An examination of the ratio of the poverty-gap to the head count index establishes that the average shortfall of the poor as a fraction of the poverty line was worse in the metropolitan areas during all 10 years of the 1990s. Similarly, the distribution of income divided by the poverty line indicates that disproportionately more of the nonmetropolitan poor subsisted on incomes near the poverty line, whereas the metropolitan poor were relatively more likely to be living in extreme poverty.