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Trade reform, infrastructure investment, and structural transformation in Africa: Evidence from Guinea-Bissau

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  • Fereira, Semertesides Bitica
  • Cateia, Júlio Vicente

Abstract

This study examines the impacts of trade reform and infrastructure investment on structural transformation and poverty alleviation in Guinea-Bissau using a dynamic computable general equilibrium model. We found that partial or complete tariff rate cuts accompanied by a scaling-up infrastructure investment funded by debt only positively impact macro-and micro-outcomes but do not generate structural transformation. Conversely, trade reform and infrastructure investment funded by a mix of debt and tax rates on the firm's income generate structural transformation with labor reallocation from agriculture to non-agricultural sectors. This structural transformation pattern favors the poor and contributes to reducing income inequality over time.

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  • Fereira, Semertesides Bitica & Cateia, Júlio Vicente, 2023. "Trade reform, infrastructure investment, and structural transformation in Africa: Evidence from Guinea-Bissau," Emerging Markets Review, Elsevier, vol. 55(C).
    • Handle: RePEc:eee:ememar:v:55:y:2023:i:c:s1566014123000328
    DOI: 10.1016/j.ememar.2023.101027
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    More about this item

    Keywords

    Trade reform; Structural change; Poverty alleviation; Economic development; African economies; CGE modeling;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts

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