The impact of tariff removal on poverty in Zimbabwe: A computable general equilibrium microsimulation

Abstract

The paper uses a microsimulation computable general equilibrium (CGE) model to study the impact on poverty of a complete removal of tariffs in Zimbabwe. The model incorporates 14,006 households derived from the 1995 Poverty Assessment Study Survey. This paper's novelty is that it is one among a small group of papers that incorporates individual households in the CGE model as opposed to having representative households. Using individual households allows for a comprehensive analysis of poverty. The complete removal of tariffs favours exporting sectors. Poverty falls in the economy while inequality hardly changes. The results differ between rural and urban areas.

Impact of Trade Liberalization on Poverty in Ethiopia: A Computable General Equilibrium Microsimulation

“…Our results are in line with previous findings that the effects of liberalization are not uniform across different types of households (Chitiga et al 2007). However, it is notable that greater disaggregation of households (for instance into net sellers and net buyers of food) is an issue for further investigation.…”

“…A study by Siddiqui (2007) finds that trade liberalization (along with a reduction in government expenditure) is not only pro-rich, but that it could also reduce the welfare of women, as compared to men, implying that trade liberalization may have differential impacts within households. A study by Chitiga et al (2007) on Zimbabwe finds that, although there is no strong evidence that trade liberalization deepens poverty or vulnerability, there is no guarantee that the poor always benefit. The study concludes that trade policies may affect the poverty status of different households differently.…”

“…In addition, elasticity values, which are not included in the SAM, are taken from other published studies that analyze countries with an economy structure similar to that of Ethiopia. For example, some elasticity are taken from Annabi et al (2005) who analyze the link between trade liberalization, growth and poverty in Senegal and Chitiga et al (2007), who analyze impact of tariff removal on poverty in Zimbabwe. Given that both studies analyze similar topics with our study and the countries are found at more or less similar economic status, being a member of Sub-Saharan African countries, justifies the use of elasticities from these studies.…”

Investigating the Benefit Incidence of Import Tariffs changes among Zimbabwean Households (2009-2014)

“…The analysis is crucial as to the best of our knowledge currently no study has done a benefit incidence analysis of import tariffs in Zimbabwe. The only studies closest to the present study are Chitiga and Mabugu (2005) and Chitiga et al (2007) which analysed the effect of import tariff changes on household poverty in Zimbabwe within a computable general equilibrium framework. The studies established that import tariff reduction had a welfare-enhancing effect which differed by household income level as well as geographic location, but did not distinguish the households by gender of headship.…”