Impacts Of Trade Liberalization On Growth And Poverty In Ethiopia A Dynamic Computable General Equilibrium Model

This paper presents a dynamic computable general equilibrium (CGE)rnModel for Ethiopia's trade liberalization that allows for quantification ofrnincome and welfare effects stemming from tariff reduction. This dynamicrnmodel has been built using a Social Accounting Matrix (SAM) of 1999/2000rnfor Ethiopia. The model is simulated for altemative policies scenariosrndepicting full and indiscriminating liberalization, full and discriminatingrnliberalization, gradual and rationalized liberalization and instantaneousrntariff liberalization. The main findings of these scenarios are a decline inrnpoverty among all households in the long run. In the short run, povertyrnremains significantly unaffected for most of the simulations' Scenarios. Thernsimulations' results show that static version of the model underestimatesrntrade liberalization's impacts on production, and welfare, since it excludesrnthe accumulation effects. However, from the altemative simulations'rnscenarios, instantaneous type of liberalization seems performing well in itsrncapacity to increase real GDP, welfare, real output, and real export in thernlong run. This liberalization also recorded substantial decline in povertyrnlevel in the long run.

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