Is trade liberalization polarisation reducing in Tunisia?

Is trade liberalization polarisation reducing in Tunisia?

A society is deemed polarised when, given a relevant characteristics such as religion, income, race or education, its population is clustered around a small number of distant, homogenous and sizable poles. The aim of this paper is to quantify the impact of trade liberalisation on polarisation in Tunisia.

The paper uses a spatial dynamic computable general equilibrium model that communicates with a micro-simulation module in order to measure the level of polarisation. The results show that polarisation worsens over time in all the regions in the business as usual scenario, where the dynamic of the economy is fuelled by investment, population growth and migration and external technical progress.

However, the author highlights that in the baseline scenario, polarisation is and remains the highest in the urban Tunis and Center-East, while unexpectedly become lowest in the Center-West, the region characterised by the highest poverty rate in the country.

More importantly, the results reveal that trade liberalisation softens such increasing trends allowing somewhat to curb income polarisation in the different regions and prevent potential social unrest. Furthermore, when in addition accounting for the dynamic effects of trade liberalisation through positive export externality, polarisation at the national level falls to an even lower level, though the ranking of polarisation by region is the same as the end-period baseline.

 

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