Impacts of trade liberalisation on poverty in SADC
Knowledge of how the poor obtain and spend their income is important in designing pro-poor policies. Trade policy will affect welfare of the poor through what they consume and what they produce. Food is by far the most important item of expenditure. The sale of unskilled labour tends to be the most important source of income for the poor, complemented by the value of "own consumption"; that is, the imputed value of what the poor consume from their own production. As the poor are more vulnerable to producer price shocks than to shocks in consumption prices, we focus on net factor income of the poor.
First of all, we need an identification of the poor and whether they are net producers or net consumers of the various goods that are liberalize. Household surveys can give a broad picture of the poverty situation in different SADC countries, and also provide information about the production and consumption patterns of the poor. As the poor are more specialized in their production patterns than their consumption patterns, information of the income sources of the poor is of particular importance. We also need to identify the price impact of liberalization and whether it is likely that it is passed through to individual producers. As regarding the border price impact, we know that the impact of multilateral liberalization (within WTO) will lead to an increase (due to the prevailing high subsidies on agriculture in EU and US) in some agricultural prices such as rice and other grains, cotton, dairy products and beef. This will favor producers of these goods at the cost of consumers. Liberalization within SADC will likely leads to a reduction in producer prices and may therefore hurt producers. At the same time exports may increase.
Finally we will analyze the impact of trade liberalization on poverty across countries, across strata and within different household strata. Some relevant sectors that may be focused are sugar, flower, beef, maize, tourism, textile and motor industries. One may start by analyzing sensitive products as one may expect them to be related to employment or poverty issues.
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