Ismaël Fofana

Case Study: A Gender-focused Macro-Micro Analysis of the Poverty Impacts of Trade Liberalization in South Africa

This case study examines the impacts on poverty and equality of the extended trade liberalisation strategy that South Africa has been following since 1994. The paper features an integrated CGE microsimulation model with explicit incorporation of non-market activities and gender decomposition. This makes it possible to assess the effects of trade liberalization on between and within-group poverty, as well as on gender-disaggregated household production and leisure. The findings reveal that trade liberalization is strongly gender biased against women.

Developing Country Superwomen: Impacts of Trade Liberalisation on Female Market and Domestic Work

This study analyses the effects of trade liberalisation on male and female work in Nepal. Our contribution is principally based upon the leisure activities modeling on one hand, and the effects of male participation in domestic work with trade policy analysis on the other hand. While previous studies explicitly incorporate leisure activities that required data about which little is known, we use a microeconomic model and alternative calibration procedures to avoid arbitrariness. The experiment conducted in this study shows that the complete elimination of tariffs on imported goods in Nepal benefits women more than men in terms of earnings as their wage increases relatively to men. Generally, female market work expands in rural households and contracts in urban households. It appears that the entrance into market production has not been met with an equivalent reduction in the time they spend in domestic work. Consequently the leisure time of women declines as they enter the labor market. Furthermore, the study indicates that leisure time consumed by men, which is already greater than that consumed by women, increases with trade reform. The extend of male participation in domestic work significantly conditions the impacts on male and female wage rates and household labor supply decisions. When male participation in domestic work activities is low, women generally devote less time to market labor. However, their contribution to household income strill increases following trade reform as their wage rates rise relative to male market wage rates. Women are more responsive to the market when there is greatest scope to substitute between female domestic and market work, as occurs when men are more involved in domestic work. However, even in these cases their domestic work does not necessarily decrease in the same proportion.

The poverty implications of high oil prices in South Africa

An energy-focused macro-micro approach is used to assess the poverty implications of government policy response to increases in international oil prices in South Africa. The first scenario assumes that increases in international oil prices are passed on to end users with no changes in government policy instruments. In this scenario, poverty indicators increase. The second scenario assumes that the world price increases are nullified by a price subsidy by the government. This scenario still leads to an increase in poverty as the beneficial price effect is cancelled out by a decline in households’ income induced by the financing method used. While revenue generated from a 50 per cent tax on windfall profit of the petroleum industry helps to minimize the loss in government revenue, it does not contribute to mitigating the increasing poverty trend, since the decline in saving and investment under this scenario restricts the countrys growth, employment and income distribution perspectives.

Simulating the Impact of the Global Economic Crisis and Policy Responses on Children in West and Central Africa

The current global financial and economic crisis, which exacerbates the impacts of the energy and food crises that immediately preceded it, has spread to the developing countries endangering recent gains in terms of economic growth and poverty reduction. The effects of the crisis are likely to vary substantially between countries and between individuals within the same country. Children are among the most vulnerable population, particularly in a period of crisis. Especially in least developed countries, where social safety nets programs are missing or poorly performing and public fiscal space is extremely limited, households with few economic opportunities are at a higher risk of falling into (monetary) poverty, suffering from hunger, removing children from school and into work, and losing access to health services. This study simulates the impacts of the global economic crisis and alternative policy responses on different dimensions of child welfare in Western and Central Africa (WCA) over the period 2009-2011. It is based on country studies for Burkina Faso, Cameroon, and Ghana, which broadly represent the diversity of economic conditions in WCA countries. In order to capture the complex macro-economic effects of the crisis and the various policy responses – on trade, investment, remittances, aid flows, goods and factor markets – and to then trace their consequences in terms of child welfare – monetary poverty, hunger (caloric poverty), school participation, child labour, and access to health services – a combination of macro- and micro-analysis was adopted. The simulations suggest that the strongest effects are registered in terms of monetary poverty and hunger, although large differences between countries emerge. More moderate impacts are predicted in terms of school participation, child labour, and access to health care, although these are still significant and require urgent policy responses. Specifically, Ghana is the country where children are predicted to suffer the most in terms of monetary poverty and hunger, while Burkina Faso is where the largest deteriorations in schooling, child labour and access to health services are simulated. Among the policy responses examined to counteract the negative effects of the crisis on child well-being, a targeted cash transfer to predicted poor children is by far the most effective program. A comparison between a universal and targeted approach is also presented.

Simulating the Impact of the Global Economic Crisis and Policy Responses on Children in Ghana

Like many countries in sub-Saharan Africa, Ghana is experiencing the impact of the global crisis and the uncertain economic outlook. Indeed, as Ghana’s economy is among the most open in Africa, it is expected that the country has been and will continue to be severely affected by the crisis, although strong export prices of its main exports (gold and cocoa) may at least partially counteract the effects associated with the crisis. The main goal of this paper is to understand the potential impacts of the 2008/9 global crisis on different dimensions of child poverty (monetary, hunger, school participation, child labour and access to health services) in Ghana and to support the policy-maker in designing the most appropriate policy response to counteract the negative effects of the crisis. As timely data are not available, a combined macro-micro economic model to predict the impact of the global crisis on children was developed. Simulations suggest that the financial crisis would increase monetary poverty and hunger across all regions of Ghana, eroding many of the gains made over the past few years. Indeed, in comparison with the year preceding the crisis, instead of a reduction of four percentage points in child monetary poverty in 2011 predicted in the absence of crisis, the simulations indicate a 6.6 percentage point increase, with a continuous increasing pattern over the period of study. The global crisis is also predicted to severely deepen hunger among children, which is simulated to increase up to 6.6 percentage points in 2011 beginning with a sharp increase already in 2009. For both monetary poverty and hunger, the impact of the crisis differs across all regions, with the Eastern, Volta and Greater Accra regions predicted to be the most affected. Children’s participation in schooling and labour, as well as their access to health services, are forecast to be much less affected by the crisis, although it is found to reverse predicted increases in enrolment and health access (with substitution toward more modern types of health services) and forecasted reductions in child labour. Finally, alternative policy options have been simulated: a cash transfer programme targeted to poor children is found to be generally more effective in protecting children than food subsidies. Indeed, with a total budget equivalent to 1% of 2008 GDP, a cash transfer – equivalent to an individual annual amount of 19.8 Cedis – would cut the predicted increase in monetary poverty by over two percentage points in 2011. Although Ghana might be in a position to rapidly implement a cash transfer programme building on the existing Livelihood Empowerment against Poverty (LEAP) programme, other interventions (or mix of policies) might be more cost-effective in the short run. A combination of a universal or regionally targeted cash transfer programmes for children aged 0 to 5 years old, together with a school-feeding programme in poorer regions, might represent an effective way to intervene quickly to improve child well-being.

Impacts of the Global Economic Crisis on Child Poverty and Options for a Policy Response in Cameroon

This study aims to evaluate the potential impacts of the 2008/09 global economic crisis on child poverty in Cameroon. It also explores the potential effects that policy responses to such a crisis could have on children. In order to do this, the study uses a macro-micro methodology. A dynamic computable general equilibrium (CGE) model is used to simulate various scenarios of the economic crisis together with policies which respond to the crisis, taking into account the different transmission channels of the global crisis to the Cameroonian economy. The results of the CGE model are then used in a micro-econometric module in order to evaluate the impacts of the simulated shocks on households in general and children in particular.Five dimensions of child poverty are examined: monetary poverty, caloric poverty, child school participation and child labour, and children’s access to health care services.The study shows that the crisis is projected to lower the real GDP growth rate by 1.3 percentage points in 2009, 0.9 in 2010 and 0.8 in 2011. The crisis would also bring about a 1.05% increase in the number of children who were poor in monetary terms in 2008 and a 4% increase in 2009, 2010 and 2011, compared to the situation without a crisis. With respect to this reference scenario, the crisis is simulated to increase the number of children who are poor in caloric terms by 0.56% in 2009, 1.08% in 2010 and 1.60% in 2011, and negatively affects, albeit lightly, both children’s school participation rate and their access to health care services.Four alternative policy responses to the crisis are simulated: a reduction in the VAT levied on the sale of food products; elimination of customs tariffs applied on imports of food products; free access to school canteens for children under the age of 15 in districts where monetary poverty is higher than the national average; and granting cash transfers to poor children. These policies, with a cost of 1%, 0.4%, 0.19% and 1% of Cameroon’s before-crisis GDP respectively, are financed either by foreign aid or by draining the state’s foreign reserves. Results from these simulations show that, in terms of poverty reduction, cash transfers appear to be the most effective of the four policy responses mentioned above, but this policy is the most ineffective at improving the real GDP growth rate. At the national level, the cash transfer policy completely counters the increase in monetary and caloric poverty engendered by the crisis over the entire period of the study. It even lowers these two types of poverty to less than the situation where the crisis did not occur. Moreover, these transfers have beneficial, although small, effects on children’s school and labour participation rates. Furthermore, beside the cash transfer policy, the subsidy for school canteens has a relatively low cost but carries fairly considerable benefits in response to the crisis, especially in alleviating caloric poverty; while the other two policies are quite ineffective, regardless of which dimension of poverty is considered.

The Gender and Poverty Impacts of Trade Liberalization in Senegal

Developing countries are deeply engaged in trade negotiations at the bilateral, regional and international (WTO) levels. As imports, exports and tariff duties all occupy an important part of their economies, far-reaching impacts on production, labor and capital markets, household incomes and, perhaps most importantly, economic growth will indubitably ensue. As men and women occupy very different roles in these economies, particularly in terms of the import and export orientation of the sectors in which they work, they will be affected very differently by these reforms. To anticipate these changes, a dynamic economy-wide model is developed with an application to Senegal. Whereas most similar existing studies consider the comparative static resource reallocation effects of trade reforms, ours is the first to focus on the growth effects (“dynamic gains from trade”), which are thought to be possibly much larger. The trade-productivity link is revealed to be the strongest growth channel, raising GDP by over three percentage points by the end of our 15 year simulation period. Trade liberalization is found to increase the gender wage gap in favor of men, especially among unskilled workers, as men are more active in export-oriented sectors such as cash crops and mining whereas women contribute more to import-competing sectors such as food crops. Furthermore, the ensuing growth effects further widen the over-all gender wage gap, as the productivity gains from increased openness are greatest in female-intensive sectors in which imports rise markedly. Thus, this suggests the need to implement policies aimed at increasing both unskilled and skilled women’s exposure in labor-intensive export industries, which is currently male dominated. A linked microsimulation analysis, based on a survey of Senegalese households, show that trade liberalization reduces poverty in Senegal, particularly in rural areas. While the fall in the relative wages of rural workers would initially lead us to believe that rural households would lose the most from trade liberalization, they are in fact compensated by greater consumer price savings, given that they consume more goods from the initially protected agricultural and agro-industrial sectors.

Gender Analysis of the Policy Responses to High Oil Prices: A Case Study of South Africa

ABSTRACT The 2007–8 surge in oil prices has created concern about its impacts on poor and vulnerable populations in developing countries. Government management of the energy crisis was shown to be important in reducing adverse impacts. This study uses an applied general equilibrium framework to examine alternative policy and external shocks with the recent surge in oil prices in South Africa through a gender lens. Simulation results show that although the 2007–8 energy crisis contributed to slowing down South African gross domestic product (GDP) growth and reducing employment and earnings, the distributional impact between men and women has been neutral. This neutrality is driven by an increase in capital inflows, which has mitigated the exchange rate depreciation owing to the oil price hike. Without an increase in capital inflows, the crisis would have significantly depreciated the exchange rate and contributed to decreasing womens market opportunities and increasing womens workload as compared to men.

Taxation policy and gender employment in the Middle East and North Africa Region: A comparative analysis of Algeria, Egypt, Morocco, and Tunisia

Empirical evidence suggests that women are more vulnerable to chronic poverty and gender inequality is likely to condition the impacts of policies on the rest of the economy and consequently on poverty itself. While gender-responsive budgeting has made significant headway into economic policy, taxation has lagged behind. Because tax policy is the most economically direct way by which governments can influence individual behavior, requests have been made for gender-responsive tax policy that promote gender equality. This study applied to Algeria, Egypt, Morocco, and Tunisia aims to contribute to this debate by assessing the induced gender employment bias of current taxation policies in these countries. It explores the pattern of male and female employment and discusses the indirect tax distortions across sectors within each country and between countries. The possible impact of the indirect tax distortion on male and female employment is quantitatively assessed using a gender-focused computable general equilibrium model. The analysis reveals that indirect taxes, in particular import duties, are biased for female employment in Algeria and Egypt, but not in Morocco and Tunisia. Female labor–intensive industries in Algeria and Egypt are highly protected in the benchmark and are not competitive internationally so that removing protection would increase competition with cheaper import substitutes and cause the sector to contract and lay off workers. In contrast, the same female labor–intensive industries are less protected in Morocco and Tunisia. Hence, removal of indirect taxes in these countries would result in quasi-neutral effects between male and female salary and wage earnings. The taxation policies in the Middle East and North Africa region have changed over the last decade and may undergo significant changes in the coming years. In light of this unpredictability, an assessment of the tax-related relative price bias on men and women constitutes a crucial step toward providing adequate guidance to planners, policymakers, and other stakeholders.

Impacts of the Global Economic Crisis on Child Poverty in Cameroon and Options for a Policy Response

This study aims to evaluate the potential impacts of the 2008/09 global economic crisis on child poverty in Cameroon. It also explores the potential effects that policy responses to such a crisis could have on children. In order to do this, the study uses a macro-micro methodology. A dynamic computable general equilibrium (CGE) model is used to simulate various scenarios of the economic crisis together with policies which respond to the crisis, taking into account the different transmission channels of the global crisis to the Cameroonian economy. The results of the CGE model are then used in a micro-econometric module in order to evaluate the impacts of the simulated shocks on households in general and children in particular. Five dimensions of child poverty are examined: monetary poverty, caloric poverty, child school participation and child labour, and children’s access to health care services. The study shows that the crisis is projected to lower the real GDP growth rate by 1.3 percentage points in 2009, 0.9 in 2010 and 0.8 in 2011. Four alternative policy responses to the crisis are simulated: a reduction in the VAT levied on the sale of food products; elimination of customs tariffs applied on imports of food products; free access to school canteens for children under the age of 15 in districts where monetary poverty is higher than the national average; and granting cash transfers to poor children.