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The Implications Of European Union Sugar Price Cuts, Economic Partnership Agreement, And Development Aid For Fiji

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  • RENUKA MAHADEVAN
  • JOHN ASAFU‐ADJAYE

Abstract

The objective of this paper is to use a set of varied scenarios related to the Economic Partnership Agreement (EPA) and the loss of European Union (EU) sugar preferences (in the form of partial and full price liberalization) in combination with the recently committed EU development aid to examine the impact on Fiji using a dynamic computable general equilibrium model. It is shown that without aid, the loss of sugar preferences has devastating impact on real output, exports, rural employment, and other macroeconomic indicators. Without aid, the EPA scenarios, on the other hand, lead to some growth in real output but depress rural employment and non‐sugar agricultural exports. Although improvements are observed across the scenarios with aid, it is argued that aid would be more effective if it directly addresses the supply‐side constraints in Fiji instead of focusing on the sugar sector. (JEL C68, D58, F17, O56)

Suggested Citation

  • Renuka Mahadevan & John Asafu‐Adjaye, 2010. "The Implications Of European Union Sugar Price Cuts, Economic Partnership Agreement, And Development Aid For Fiji," Contemporary Economic Policy, Western Economic Association International, vol. 28(1), pages 52-64, January.
    • Handle: RePEc:bla:coecpo:v:28:y:2010:i:1:p:52-64
    DOI: 10.1111/j.1465-7287.2009.00156.x
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    References listed on IDEAS

    as
    1. Theodore Levantis & Frank Jotzo & Vivek Tulpulé, 2005. "Sweetening the Transition in EU Sugar Preferences: The Case of Fiji," The World Economy, Wiley Blackwell, vol. 28(6), pages 893-915, June.
    2. Narayan, Paresh Kumar & Narayan, Seema, 2005. "Estimating income and price elasticities of imports for Fiji in a cointegration framework," Economic Modelling, Elsevier, vol. 22(3), pages 423-438, May.
    3. Arvind Panagariya, 2005. "Agricultural Liberalisation and the Least Developed Countries: Six Fallacies," The World Economy, Wiley Blackwell, vol. 28(9), pages 1277-1299, September.
    4. Keck, Alexander & Piermartini, Roberta, 2005. "The economic impact of EPAs in SADC countries," WTO Staff Working Papers ERSD-2005-04, World Trade Organization (WTO), Economic Research and Statistics Division.
    5. Mahadevan, Renuka, 2008. "The high price of sweetness: The twin challenges of efficiency and soil erosion in Fiji's sugar industry," Ecological Economics, Elsevier, vol. 66(2-3), pages 468-477, June.
    6. Karingi, Stephen & Perez, Romain & Oulmane, Nassim & Lang, Rémi & Sadni Jallab, Mustapha, 2006. "Assessment of the Impact of the Economic Partnership Agreement between the COMESA countries and the European Union," MPRA Paper 13294, University Library of Munich, Germany.
    7. Mr. Hans P Lankes & Miss Katerina Alexandraki, 2004. "The Impact of Preference Erosionon Middle-Income Developing Countries," IMF Working Papers 2004/169, International Monetary Fund.
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    More about this item

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • O56 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Oceania

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