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Research Proposal:
Growth and Poverty Reduction Effects of Alternative Trade Policies in Benin.
This research project aims at using a non-separable general equilibrium model to investigate agricultural trade policies that could help reduce poverty incidence and sustain economic growth in Benin. Currently, Benin's growth performance heavily – hence vulnerably – depends on cotton export and smuggled import-export trade to Nigeria and other neighboring landlocked countries. Poverty remains a nationwide challenge while the pace of economic growth seems to decelerate. Diversifying the export sector may help insure pro-poor revenue distribution patterns and sustain the growth pace. Therefore, the research revolves around the question: what is the best strategy to obtain such a diversification in agricultural export trade? In other words, how (what policy instruments) and where (what activities) should the government intervene to sustain growth and reduce poverty at minimum cost (political feasibility)? The objective is to experiment alternative trade policy instruments and compare their relevance to engage entrepreneurs in a search for market shares for either traditional or new products. The project also seeks to introduce some innovative features into the standard CGE modeling approach, dealing more properly with non-separability of farm households' economic decisions, non-separability of factors and products in production functions, multidimensional heterogeneity of farm households, and spatial segmentation of commodity markets.
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