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Can trade liberalisation in South Africa reduce poverty and inequality while boosting economic growth? Macro--micro reflections

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  • Ramos Mabugu
  • Margaret Chitiga Mabugu

Abstract

South Africa is trapped in a cycle of modest growth, unacceptable poverty levels and record unemployment. This has led to renewed interest on the relationship between macro (growth) and micro (poverty and distribution) issues. This paper uses a macro--micro tool that couples a computable general equilibrium model with microsimulation models to examine the impact of further unilateral trade policy reforms on growth, poverty and welfare. Trade liberalisation alone has very minimal short-run macroeconomic consequences while its long-term impacts are positive and magnified by technical factor productivity (TFP) effects. Trade liberalisation has no appreciable impact on poverty in the short run even if we allow for trade-induced TFP increases. In the long run, however, poverty reduces even in the case when we do not allow for TFP increases. Trade liberalisation policy has been found to be progressive despite the low level of tariff protection remaining in South Africa.

Suggested Citation

  • Ramos Mabugu & Margaret Chitiga Mabugu, 2014. "Can trade liberalisation in South Africa reduce poverty and inequality while boosting economic growth? Macro--micro reflections," Development Southern Africa, Taylor & Francis Journals, vol. 31(2), pages 257-274, March.
    • Handle: RePEc:taf:deveza:v:31:y:2014:i:2:p:257-274
    DOI: 10.1080/0376835X.2013.871197
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    Cited by:

    1. Simplice A. Asongu, 2015. "Growth and Institutions in African Development by Augustin K. Fosu," Research Africa Network Working Papers 15/033, Research Africa Network (RAN).
    2. Abdelmohsen A. Nassani & Abdullah Mohammed Aldakhil & Muhammad Moinuddin Qazi Abro & Khalid Zaman, 2018. "Effective International Tourism Management: A Strategic Approach," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 137(3), pages 1201-1224, June.
    3. Andrew E. Hansen-Addy & Davide M. Parrilli & Ishmael Tingbani, 2024. "The impact of trade facilitation on African SMEs’ performance," Small Business Economics, Springer, vol. 62(1), pages 105-131, January.

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