Browsing by Author "Ermias, Engida"

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    Economy Wide Impact of Unilateral Agricultural Trade Liberalization. A Recursive Dynamic CGE Model for Ethiopia:: The Case of EPA
    (A.A.U, 2009-06) Ermias, Engida; Dr. Wassie, Brehanu
    This paper sets out to explore the economy wide effects of Ethiopia's measure to liberalize its agricultural trade according to the rules of EPA (Economic Partnership Agreement). This objective is undertaken by highlighting 011 sectoral and macroecollomic indicators. To this end, the dy"amic recursive CGE modelillg approach in the COli text of the Ethiopiall economy is used. The findings show that there is 110 Significant change in the economy by liberalizing the agriculture sector only. Productivity ill the agricultural sector decreases together with the real GDP. Total investment in the economy declines while ullemployment gets deeper and deeper cOllsecutively. Returns to factors of production decrease except a slight increase in the real wage rate. As a result, owners of factors of production are discouraged ill evelY sector. Domestic producers in the agriculture sector are lIegatively affected by the trade liberalization measure. The opposite is true for producers in the lion agriculture sector. 011 the other halld, Domestic consumers are better off because of the availability of cheap agricultural commodities. However, the aggregate supply of every composite commodity decreases together with private cOllsumption. On the other halld, government fiscal revenue falls, its cOllsumptioll rises however. Moreover trade liberalization is likely to increase volume of export ill the lion agriculture sector. Therefore, the findillgs of this paper imply that domestic policies should be encouraging for domestic producers alld export oriented for the 11011 agricultural sectors.