Trade liberalization and poverty in the Middle East and North Africa
The effect of agricultural trade liberalisation on poverty varies widely across countries, in part because the effect of liberalisation on agricultural prices is ambiguous. This report examines the impact of trade liberalisation on non-oil exporting countries of the Middle East and North Africa (MENA), with particular emphasis on its impact on the poor. These countries are: Djibouti, Egypt, Jordan, Lebanon, Morocco, Syria, Tunisia, and the West Bank and Gaza.
Some notable findings demonstrated in the paper include:
- in Egypt, higher wheat prices reduce poverty, and higher rice and horticultural prices lower poverty, but the effects are quite small
- in Tunisia, it seems that trade liberalisation would have a substantial effect in reducing poverty
- in Syria, the impact of liberalisation on the poor will depend somewhat on complementary policies
- in Morocco, the gains would not fully offset the negative effect of trade liberalisation on the returns to unskilled agricultural labour
The paper concludes that the link between trade liberalisation and agricultural price changes is ambiguous, and the effect of agricultural price changes on poverty is weak. Nevertheless, the authors draw the following general conclusions:
- the impact of trade liberalisation on small farmers and other poor households in the MENA region partly depends on non-trade policies, yet trade facilitation enhances the economic effect of trade liberalisation
- the net effect of liberalisation on domestic agricultural prices will depend largely on the initial level of protection
- if the objective is to assist poor and vulnerable households regardless of their occupation, a different type of measure rather than ‘decoupled payments’ should be considered
In the final conclusion, the report states that trade policy is a poor instrument for addressing overall poverty in the MENA region, though the impact of trade liberalisation on certain agricultural producers may be substantial.
