This paper aims to develop a methodology for identifying poor winners and losers from trade policy changes. Two methodologies are frequently employed to assess the linkages between trade and poverty, case studies and general equilibrium trade models. It is argued that insights from both can be mutually reinforcing.
Zambia is used as an ‘example’ country. The key proposition from the case study literature is that country, regional and global trade policy reforms affecting Zambia over a 10?15 year period have been pro-poor. This is tested using the GTAP dataset and the standard GTAP general equilibrium model for 1997. A post simulation calculation based on four classes of households in Zambia for the poverty impacts. A variety of country, regional and global trade policy experiments were then applied.
A key preliminary finding is that the early unilateral trade policy reforms had strong over-all welfare effects in Zambia compared with other trade policy shocks considered. However, the results suggested that the unilateral trade policy reforms were not pro poor whereas later regional and potential global reforms were. On the model specification, the GTAP dataset and standard runGTAP model imposes a number of important limitations for trade and poverty work.
The standardised GTAP dataset throws away too much useful information for trade and poverty analysis that is available in the readily available underlying datasets on which the GTAP dataset was built. Resolution of these problems cannot be readily accommodated within the standard GTAP modelling framework.
The above suggests an alternative research strategy, in which the CGE model and country case study interface is first explored with country models. Later point, such country models could be tied into a global model using the GTAP dataset for scenario calculations and a common sectoral classification. Further work on these lines is more likely to complete the bottom-up strategy for the analysis of trade and poverty impacts.
