MSU Agricultural, Food, and Resource Economics
The Malian agricultural sector faces a series of trade reforms originating from within West Africa and from the rest of the world. These reforms are expected to change income and food consumption levels in Mali, but the direction and the magnitude of these changes are unknown. This dissertation contributes to the understanding of how, and the degree to which, these reforms would affect welfare and food security in Mali. The analysis is based on computable general equilibrium simulations using a 1997 social accounting matrix that has been specifically built for the purpose.
The dissertation is organized in seven chapters. Chapter I reviews the theoretical and empirical evidence supporting the need to investigate the impacts of trade reforms in the specific context of the Malian economy. Chapter II discusses the use of the Hicksian equivalent variation to measure welfare impacts, as well as the use of changes in household food consumption as a proxy measure of food security. Chapter III presents nine trade reforms scenarios, organized in four groups: (i) the FAPRI and OECD price change scenarios of partial reforms of world commodity markets; (ii) the IFPRI-1 status quo and the IFPRI-2 full liberalization price change scenarios; (iii) the EEP effective erosion of existing preferences and the DFA complete duty-free access preferential trade scenarios; and (iv) government policy scenarios on applying a common external tariff regime, banning cereals exports, and increasing investments in key sectors. Chapter IV presents the analytical method, which is a single-country computable general equilibrium (CGE) model in the neoclassical structuralist tradition. The Malian model is based on a standard CGE model from the International Food Policy Research Institute, which is itself based on the Dervis, de Melo and Robinson (1982) seminal work. The CGE framework uses data from a disaggregated social accounting matrix (Chapter V), and the simulation results represent counterfactuals the nine trade reform scenarios.
The results, presented in Chapter VI, reveal that Mali has as much to gain from increased agricultural reforms in world markets, as it has to gain from deepened commercial integration in West Africa. The gains would amount to an average of three percent of initial income levels. Most of the gains would go to urban consumers who would benefit from reduced prices, appreciated real exchange rate, and increased factor incomes. In general, and in absence of productivity gains, rural producers would lose reductions in world commodity prices. The negative effects are mitigated, and could even be reversed, if Mali benefits from gains in productivity. The results also indicate that expanding existing trade preferences would raise incomes and food consumption in Mali, whereas reducing or eliminating these preferences would reduce incomes and weaken food security in Malian households.
The last chapter of the dissertation discusses several implications and limitations of these results. Mali would gain by allowing global market forces to work in the economy, expanding regional trade, increasing investments in key sectors, and improving agricultural productivity. While the first two options come at the cost of increased urban inequality, the last two have the potential to deliver Pareto-compatible results. Overall, the analysis may be refined by improving the underlying social accounting matrix.