modelling the impact of national policies on ssa countries

Pierre BoulangerHasan Dudu

Emanuele Ferrari (team leader)Alfredo Mainar Causape

Modelling the Impact of National Policies on SSA Countries

IFPRI-CTA-EC-HarvestPlus-JRC Event, Brussels, June 14, 2016

European Commission, Joint Research Centre Institute for Prospective Technological Studies (JRC-IPTS)

AGRILIFE Unit

2

● Need for ex-ante policy impact analysis of Partner Countries sectorial measures, as well as EU policies (development and cooperation, agricultural, trade, etc.) on food security and rural poverty alleviation, especially in SSA.

● Focusing on the food and agricultural sector JRC has undertaken major macroeconomic modelling exercises, using CGE modelling tools.

● Ability to model policies which affect all sectors/people/economy● A CGE model is a system of nonlinear simultaneous equations

representing the constrained optimising behaviour of all agents within the economy (e.g. producers, consumers, factor suppliers, exporters, importers, taxpayers, savers, investors, or government) Complete interrelations within an economy

Motivation Modelling Simulation Conclusion

Example of policy analysis (EU and national):

1.Agricultural inputs, investments programs, etc.2.Infrastructure 3.Education & Health4.Social protection5.Fiscal6.Trade, food aid7.Others (national specific)

+ Impact of EU policies on African regions (e.g., CAP)

Five countries plus one region over 5 years: Kenya (2015-), Ethiopia (2016-), Senegal (2016-), Cote d'Ivoire (2017-), Rwanda (2017-)


4

Use of Computable General Equilibrium (CGE) models, based on Social Accounting Matrices (SAM) for ex ante analysis of domestic/regional/EU policies' effects on food and nutrition security

POLICY

IMPACT

MAGNET GLOBE STAGE-DEV


• STAGE is a ‘standard’ single country CGE model• The model is designed for calibration using a reduced form of a

SAM that broadly conforms to the UN System of National Accounts (SNA).

• STAGE-DEV model is enhanced with the following extensions:

1. Nested consumption/utility functions2. Endogenous functional distribution of income3. Home Production Home Consumption (HPHC)4. Endogenous labour supply5. Household internal migration6. Factor market segmentation7. Fully flexible Production Function


• Open source model. Documentation: http://www.cgemod.org.uk/stage.html

http://www.cgemod.org.uk/stage.html

6

SAM (Social Accounting Matrix) constr./improvement incl. agricultural/regional details, including updated national Accounts (IOTs, SUTs) with disaggregation of :Household Types (e.g. urban/rural), macroeconomic aggregates (e.g. production, consumption), functional distribution of income, supply of labour by type/household, etc.


Informal cooperation

with

IFPRI**

FAO-MAFAP**

AGRODEP**

others

7

Example of macro analysis: Input Policies in Kenya A new SAM for Kenya (2014) based on official data from KNBS

•9 agro-ecological areas: (i) Nairobi, (ii) Mombasa, (iii) High Rainfall, (iv) Semi-Arid North, (v) Semi-Arid South, (vi) Coast, (vii) Arid North, (viii) Arid South, and (ix) Turkana•54 activities (12 of them accounts of households as producers)•52 marketed and 18 HPHC commodities•3 types of labour (skilled, unskilled and semi-skilled) in 10 regions (30 labour accounts in total)•3 types of capital (agricultural, non-agricultural and livestock) and 2 types of land (irrigated and non-irrigated)•5 types of taxes: direct, indirect, sales, factors and imports taxes.•24 regionalized Representative Households Groups (RHG)


8

• Key policy background: Agricultural Sector Development Strategy (ASDS), which sets the vision to achieve an average growth rate of 7% per year; the Comprehensive African Agricultural Development Programme (CAADP); the National Food and Nutrition Security Policy (FNSP); recognises as key issues the increased funding to the food and agriculture sectors to 10%

• 3 scenarios:• Fertiliser scenario: New plant in Uasin Gishu that will

increase both fertiliser production and agricultural productivity

• Seed scenario: increased in commercial seed productivity + hypothetical seed subsidy

• Irrigation scenario: higher usage of irrigation water that will increase agricultural productivity


First results•Decrease in CPI, i.e. relatively better access to food, higher for rural household and area•Improvement of self-suficiency

Table1. Consumer Price Index


Table 2. Share of imports in domestic supply

+ Results on macro aggregates; share of HPHC in food consumption; calorie, protein and fat intake per capita; internal migration, etc.

Workshop in Nairobi; April 26, 20165th Conference of the African Association of Agricultural Economists in Addis Ababa; Sept. 2016

forthcoming JRC Report

10

• Direct involvement of DG DEVCO, EU delegations and SSA institutions (Ministries, Research Centres, etc.) in choice of relevant policies to be modelled and analysed

• Development of a network of local experts (individual and institutions)

• Capacity building in modelling for delegations, DG DEVCO, local partners (e.g., TEGEMEO)

• Relationships with recognised players in development (e.g., IFPRI, Agrodep, FAO-MAFAP, USAID, GIZ, OXFAM, Foodsecure FP7)


11

Thank you for your attention!

contacts:[email protected] / [email protected]

mailto:[email protected]

mailto:[email protected]

CGE – Visual representation

12

Appendix

• Standard Model Features of STAGE:• Trade is modelled using nested functions with an adaptation

to mitigate the impacts of small trade shares.• Production is modelled using nested CES functions; all

activities (industries) are modelled as multi product activities, i.e., the SAM is configured using a Supply and Use table format.

• There are multiple tax instruments on commodities, activities, factors and institutions and multiple sources of savings.

• The model is designed to include large numbers of factor• (labour) and household accounts. • Additional Model Features: Domestic trade and transport

margins; price responsive output mix by activities.

Appendix

Appendix

Commodities Margins Activities Factors Households Enterprises Government Savings-Investment Rest of the World Total

CommoditiesTransaction cost

(trade and transport)

Intermediate consumption (inputs)

Household consumption

Government consumption

Fixed capital formation and change in stock (Investment)

Exports Total demand

MarginsTransaction cost

(trade and transport)

Total margins

ActivitiesMarketed output /

Domestic sales Activity income

FactorsFactor income from

activitiesFactor income from

ROW Factor income

HouseholdsLabour and mixed

income(Inter Households

transfers)

Distributed benefits to Households / Other

transfers

Current transfers to Households

Current transfers to Households from

ROWHousehold income

EnterprisesOperating surplus /

Capital incomeCurrent transfers to

Enterprises

Current transfers to Enterprises from

ROWEnterprises income

GovernmentNet taxes on

productsNet taxes on production

Factor income to Government Direct taxes

Surplus to Government /

Enterprises taxes

Current transfers to Government from

ROWGovernment income

Savings-Investment Household savings Enterprises savings Government savings(Capital accounts

transfers)Capital transfers from

ROW Savings

Rest of the World ImportsFactor income to

ROWHouseholds transfers

to ROW Surplus to ROWGovernment transfers

to ROWCurrent external

balanceForeign exchange

outflow

Total Total supply Total marginsCost of production

activitiesFactor income

paymentsHouseholds expenditures

Enterprises expenditures

Government expenditures Investment

Foreign exchange inflow

Social Accounting MatricesSAM structure and estimation

Appendix

Kenya SAM estimationKenya SAM 2014 (abbreviated version), Ksh

ch cm m ahf ahc a flab fland flivst fcap_ag fcap_na hh enter gov dirtax indtax saltax facttax imptax i_s row TotalHPHC commodities (ch) 150.7 161.1 0.9 313

Marketed commodities (cm) 292.5 293.9 50.1 3,158.5 4,162.0 750.4 1,144.2 954.0 10,806

Margins (m) 292.5 292

Households as activities food (ahf) 312.7 1,045.8 1,358

Households as activities cash-crops (ahc) 197.7 198

Activities (a) 7,087.1 7,087

Labour factor (flab) 92.7 14.6 1,545.9 15.9 1,669

Land factor (fland) 536.2 113.7 206.8 857

Livestock (flivst) 141.2 33.6 175

Capital agricultural (fcap_ag) 98.7 19.3 77.3 195

Capital non-agricultural (fcap_na) 45.1 1,912.3 1,957

Households (hh) 1,600.2 856.1 174.7 195.2 455.4 1,048.5 41.6 324.3 4,696

Enterprises (enter) 0.3 1,501.0 505.4 2,007

Government (gov) 554.0 152.7 207.0 7.9 160.7 25.7 1,108

Direct taxes (dirtax) 311.6 242.4 554

Indirect taxes (indtax) 152.7 153

Sales taxes (saltax) 207.0 207

Factor taxes (facttax) 6.6 0.3 0.1 0.1 0.9 8

Imports taxes (imptax) 160.7 161

Save/Investment (i_s) 51.3 715.8 -213.9 592.0 1,145

Rest of the World (row) 1,815 62 10 25 1,912

Total 313 10,806 292 1,358 198 7,087 1,669 857 175 195 1,957 4,696 2,007 1,108 554 153 207 8 161 1,145 1,91216

Appendix

modelling the impact of national policies on ssa countries

Government & Nonprofit