Poverty impacts of trade liberalisation
Assessing the poverty impact of trade liberalisation: A critical appraisal of the computable general equilibrium approach
Assessing the effectiveness of the computable general equilibrium approach in the context of trade liberalisation
Authors:
C. Kirkpatrick; S. Scrieciu; Impact Assessment Research Centre
Publisher:
Institute for Development Policy and Management, Manchester, 2006
This paper provides a critical assessment of methods used to measure the potential impact of trade liberalisation on poverty. In particular, the report assesses the Computable General Equilibrium (CGE) economic modelling techniques which have gained continuously in popularity as a method for assessing the ex ante impact of trade policy reforms
The report first summarises the results of several recent modelling studies that have been widely quoted during the WTO’s Doha Development Agenda negotiations and highlights their limitations for poverty impact analysis.
The paper concludes that:
- it is inappropriate to draw strong generalised policy conclusions from CGE analysis
- the level of micro level analysis that can be achieved in CGE models falls well short of the detailed impact on individual household incomes and livelihoods that is needed for accurate estimates of poverty impacts
- an integrated approach to impact assessment methodology is required, which draws on a range of sources of evidence
[adapted from author]
