Economic impacts of developing a biofuel industry in Mozambique

ABSTRACT

Mozambique is one of the most promising African countries for producing biofuels and the national biofuel policy of 2009 identifies measures to incentivize biofuel production. Demand for biofuels in the Southern African Development Community is expected to increase over the next few years as 7 of its 15 member states have implemented or proposed the implementation of blending mandates by 2020. South Africa is one of these countries. Using a dynamic recursive computable general equilibrium (CGE) model, we estimate the impacts of expanding biofuel production in Mozambique under both commercial and smallholder-type farming models, including and excluding bagasse cogeneration.     

Constraints to biofuel feedstock production expansion in Zambia

ABSTRACT

World biofuel production has been increasing to improve energy security and mitigate global warming. Southern Africa’s bioenergy demand could increase with South Africa’s planned fuel blending mandates, triggering increased demand for feedstocks and agricultural land. Ensuring sustained production will require a full understanding of the constraints to production expansion, considering the tradeoffs that may be generated in rural areas, as has been observed for large-scale land acquisitions. We analyse the social and biophysical constraints to biofuel production expansion in Zambia. Previously social constraints have received limited attention even though they may prove more problematic. Results indicate that Zambia is at least moderately suitable for bioenergy investments with biophysically suitable areas largely coinciding with the socially suitable areas. However, existing gaps in compensatory procedures may inhibit large-scale projects’ access to development finance if not aligned with internationally acceptable practices, and generate negative outcomes if safeguards are not in place.     

关于一种投资乘数新算法的探讨——基于CGE的模拟分析

以往计算投资乘数主要采用两种方法,或是建立计量模型并根据乘数的定义来计算从而得到总量的结果,或是利用改进后的投入产出分析法得到结构化的结果.本文尝试利用CGE模型的新算法计算了我国分类居民的投资乘数,得到的结果是城镇居民的投资乘数为2.83,而农村居民的投资乘数为1.35.     

Vietnam's Rice Policy: Recent Reforms and Future Opportunities

The present paper examines the economic consequences of the most recent reform of Vietnam's rice policy, the removal of the rice-export quota. The reform is analyzed in light of domestic policy barriers, such as restrictions on cross-sectoral land mobility, as well as international policy barriers, such as distortions introduced by preferential trade agreements. The analysis expands and amends a global computable general equilibrium model to represent these features. The analysis shows that the export quota has been a very restrictive policy tool that has kept Vietnamese rice production and exports well below potential. Both the domestic and international policy constraints contribute to this situation.     

Economic and Distributional Impact of COVID-19: Evidence from Macro-Micro Modelling of the South African Economy

A computable general equilibrium model linked to a microsimulation model is applied to assess the potential short-term effects on the South African economy of the ongoing COVID-19 pandemic. With a particular focus on distributional outcomes, two simulations are run, a mild and a severe scenario. The findings show significant evidence of decline in economic growth and employment, with the decline harsher for the severe scenario. The microeconomic results show that the pandemic moves the income distribution curve such that more households fall under the poverty line while at the same time, inequality declines. The latter result is driven by the disproportionate decline in incomes of richer households while the poorest of the poor are cushioned by government social grants that are kept intact during the pandemic. The COVID-19 pandemic is still unfolding and its economic modelling as well as the data used to operationalise the model will need to be updated and improved upon as more information about the disease and the economy becomes available.     

Quantifying shifts in primary factor demand in the South African economy

This article uses a dynamic computable general equilibrium model to explain the persistence in the high levels of unemployment in the South African economy in spite of modest to relatively strong output growth. We make use of a historical simulation for the period 2006–13 and find that the capital–labour ratio increased despite a relative increase in the rental price of capital. Classical economic theory suggests that changes in industry preferences toward capital and labour lead to adjusted capital–labour ratios. We quantify the changes in industry factor preferences during this period and highlight their impact in explaining observed labour market outcomes. Other changes in the economy over this period are also quantified.     

Deregulation or Governmental Intervention？ A Counterfactual Perspective on China＇s Electricity Market Reform

The long-standing severe power shortage in China has provoked much debate on whether China should further promote market-oriented electricity reform. The present paper addresses this issue by analyzing the impacts of deregulation of the electricity generation sector and retailing activities on other sectors, the macroeconomy and electricity users. A countetfactual scenario analysis is used based on a simplified computable general equilibrium framework. We find that deregulation can significantly improve the efficiency of electricity production, increase employment and enhance household welfare. These nontrivial findings can help to resolve many controversies about governmental intervention during China＇s economic transition. Our findings have two implications relating to policy feasibility and applicability; that is, competition in the electricity retail market shouM be phased in, and the necessary arrangements for unemployment in incumbent firms shouM be considered.     

School effectiveness in Zambia: The origins of differences between rural and urban outcomes

Surveys have shown that Zambian urban residents have significantly higher schooling attainment rates than rural residents and are more likely to be literate. To address this inequality in education outcomes it is important to understand to what extent this is a result of a resource gap (for example, differences in teachers or textbooks) or different returns on resources (for example, an additional teacher makes more of a difference in urban areas). To explore this idea this study performed an Oaxaca decomposition on the SACMEQ II data set for Zambia. The results showed that the rural–urban gap was attributable both to differences in the presence of resources (55% of the gap) and differences in the returns on resources (45% of the gap). Since returns on resources are considerably lower in rural areas, additional resource investment alone is unlikely to close the gap between rural and urban schooling outcomes.     

Measuring Restrictiveness of Bilateral Trade Policies: A Comparison between Developed and Developing Countries

This paper compares the degree of openness to trade of three developed countries markets—the European Union, Japan, the United States—with that of three middle-income countries, namely Brazil, India, and China. A theoretically consistent protection measure—the Mercantilistic Trade Restrictiveness Index (MTRI)—is employed to average tariffs at different levels of aggregation. The computation relies on a comparative static applied general equilibrium model (Global Trade Analysis Project—GTAP) featuring imperfect competition as well as on the bilateral applied tariffs included in the most recent version of the GTAP database. Results provide a different picture from what could have been expected given the widely publicized diffusion of preferential schemes supposedly favoring developing countries exports. JEL no.  F17, C68, Q17     

Organization of production in a competitive economy

In the present paper we introduce a general equilibrium model of the organization of production and analyze the optimality and existence of an equilibrium. We introduce the production technology of the economy as a collection of production processes and allow each potential producer to choose the production processes to operate. We model organization and transaction costs by means of an organizational technology that determines the production set of a producer as a function of the production processes that the producer chooses to operate. For a competitive economy, we show the equilibrium organization of production is optimal and then prove a general existence theorem for an atomless economy.     

Capital Account Liberalisation by China and the Effects on Global FDI and Trade

We model the partial liberalisation of the capital account by China using a dynamic computable general equilibrium model of the world economy. Our results indicate that a reduced capital controls on foreign direct investment (FDI) would lead to a significant increase in FDI capital in China and a significant reduction in the cost of capital in China relative to the rest of the world. Furthermore, we observe an increase in capital stocks in most regions, which benefits most regions in terms of GDP and GNP. The Chinese economy grows by 3.3% driven by a significant fall in the rental price of capital that, in turn, lowers domestic costs, causes a real depreciation of the exchange rate and thus increased exports relative to other regions. We also observe an across-the-board increase in the saving rate driven by the rise in the price of consumption relative to investment (saving) in all regions.     

Analysis of the animal feed to poultry value chain in Zambia

ABSTRACT

Rapidly growing populations, urbanisation and income are together triggering increased demand for high-value agricultural commodities across Southern Africa with scope for gains from trade and regional integration. The poultry sector in Zambia, in particular, has witnessed a rapid growth triggering increased investments and competition, benefiting the consumers. Despite this growth, the sector still faces huge challenges hindering the development of the animal feed, feed input and poultry production sub-sectors. This has limited the extent of participation of the Zambian poultry industry in the regional market due to uncompetitive prices. This study analyses the animal feed to poultry value chain in Zambia, focusing on the industry capabilities with a view to enhancing its competitiveness and production for the regional market. Enhancing value chain capabilities will require improvements in productivity and production of key poultry inputs, and addressing transportation inefficiencies and coordination among governments.     

Prospects for ASEAN-China Free Trade Area： A Qualitative and Quantitative Analysis

The current global financial and economic crisis is giving new life to initiatives that promote closer economic integration among East Asian countries. A significant example is the ASEAN- China Free Trade Area （.4 CFTA）, which is set to come into effect around 2010..4CFTA aims to boost trade between two economies that are partners as well as competitors： ASEAN and China. In the present paper, we use insights from customs union theory in a qualitative analysis considering whether,4CFTA would benefit both sides. We also apply a computable general equilibrium model to perform a quantitative analysis of the same issue. Both our qualitative and quantitative analyses provide grounds for guarded optimism regarding A CFTA ＇s prospects as a vehicle for strengthening the economic partnership between ASEAN and China.     

China＇s Free Trade Agreements with ASEAN, Japan and Korea： A Comparative Analysis

The role of China in East Asia's recovery from the recent global financial and economic crisis highlights China's position as an engine of growth for this region. From the viewpoint of China, there are many potential gains from entering into free trade agreements (FTAs) with its neighbors, who collectively form a large and fast‐growing market. In this paper, we qualitatively and quantitatively assess the four main permutations of China's FTAs with East Asian major economies: China–ASEAN, China–Japan, China–Korea and ASEAN+3. We compare the effects of these FTAs on China's output and welfare. Our comparative analysis shows that China will gain from all three bilateral FTAs, while gaining the most from the ASEAN+3. Because forming a region‐wide FTA, such as the ASEAN+3, is expected to be gradual and difficult, China should continue to engage in bilateral FTAs as a medium‐term and alternative strategy. However, in the long term, China should pursue a region‐wide FTA.     

Exchange Rate and Inflation Dynamics in a Resource Rich Setting: The Case of Zambia

This paper investigates the relationship between copper prices, the exchange rate and consumer price inflation in Zambia using a structural vector autoregression with quarterly data for 1995–2014 and a combination of sign and zero restrictions to identify relevant global and domestic shocks. The paper makes two contributions. First, it provides new measures of exchange rate pass through (ERPT), based on less restrictive assumptions than previous estimates, to show how changes in the value of the kwacha are reflected in changes in consumer prices (distinguishing food and non‐food inflation). Second, the ERPT is disaggregated to demonstrate that measured ERPT depends on the nature of the shock, with implications for policy responses. Although the price of copper is the most important driver of the exchange rate, the fluctuations it caused are associated with a low pass‐through of about 7% (consistent with a period of relatively low inflation). Exchange rate fluctuations caused by monetary shocks, in contrast, come with a pass‐through of up to 25% (and even more for food prices). A fast response by monetary authorities can mitigate the adverse effects of exchange rate shocks.     

Teacher Pay and Educational Outcomes: Evidence from the Rural Hardship Allowance in Zambia

This paper studies the effect of unconditional teacher salary increases on teacher and student outcomes. To study the issue, we evaluate the rural hardship allowance in Zambia, which corresponds to a salary increase of 20%. This allowance is allocated to schools on the basis of a distance criterion allowing us to use a regression discontinuity design. We use administrative data from 2004 to 2015 on school, teacher characteristics and test scores. The administrative data are complemented with a telephone survey of schools close to the eligibility threshold. We find that crossing the threshold increases the share of teachers obtaining the allowance by 40%. Because of some non‐compliance with the allocation rule, our estimates are fairly imprecise. Focusing on provinces with better compliance we find some, albeit weak, evidence that the allowance increases the stock of teachers. We, however, find no effects on teacher characteristics or on student test scores.