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Good Intentions Aren’t Created Equal: A General Equilibrium Analysis of Food Aid Policies in Ethiopia

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  • Spencer, Jenny

Abstract

The combination of Ethiopia’s dependence on agriculture and its vulnerability to drought and famine have led to wide-scale chronic poverty and food insecurity and a greater reliance on food aid than any other country in the world. With the creation of the Productive Safety Net Program (PSNP) in 2005, the Government of Ethiopia and donors took a step to move away from the emergency food aid system and toward a longer-term, more sustainable, government-led safety net program. However, the development of the program involved many debates, particularly around the ideal composition of aid to be provided to beneficiary households. This study employs a social accounting matrix and computable general equilibrium (CGE) model to examine the economy-wide effects of internationally-procured food aid and cash transfers. It finds that internationally-procured food aid creates disincentive effects for domestic producers and does not, in fact, increase the availability of cereals in the country, resulting in decreased net household food consumption. In response, a government subsidy to domestic producers could be implemented to counteract many of these negative effects, but it is an expensive policy that the government cannot afford over the long-run. Conversely, cash transfers are shown to have positive multiplier and spillover effects for households and to benefit producers. However, data and model constraints suggest that further work should be done to validate these findings.

Suggested Citation

  • Spencer, Jenny, 2015. "Good Intentions Aren’t Created Equal: A General Equilibrium Analysis of Food Aid Policies in Ethiopia," Conference papers 332576, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:332576
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    File URL: https://ageconsearch.umn.edu/record/332576/files/8458.pdf
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    References listed on IDEAS

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    1. Caria, A. Stefano & Tamru, Seneshaw & Bizuneh, Gera, 2011. "Food security without food transfers?: A CGE analysis for Ethiopia of the different food security impacts of fertilizer subsidies and locally sourced food transfers," IFPRI discussion papers 1106, International Food Policy Research Institute (IFPRI).
    2. Gelan, Ayele Ulfata, 2007. "Does food aid have disincentive effects on local production? A general equilibrium perspective on food aid in Ethiopia," Food Policy, Elsevier, vol. 32(4), pages 436-458, August.
    3. Robinson, Sherman & Levy, Stephanie, 2014. "Can cash transfers promote the local economy? A case study for Cambodia:," IFPRI discussion papers 1334, International Food Policy Research Institute (IFPRI).
    4. Abdulai, Awudu & Barrett, Christopher B. & Hoddinott, John, 2005. "Does food aid Really have disincentive effects? New evidence from sub-Saharan Africa," World Development, Elsevier, vol. 33(10), pages 1689-1704, October.
    5. Caria, A. Stefano & Tamru, Seneshaw & Bizuneh, Gera, 2011. "Food security without food transfers?: A CGE analysis for Ethiopia of the different food security impacts of fertilizer subsidies and locally sourced food transfers," ESSP working papers 29, International Food Policy Research Institute (IFPRI).
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