Economics

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Browsing Economics by Subject "A CGE model Approach"

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    The potential cost and benefits of WTO membership for Ethiopia: A CGE model Approach
    (A.A.U, 2008-06) Seifu, Ashebir; Estiphanos, Girma(Dr.)
    This paper presents a structuralist CGE mode l for Ethiopia 's to assess the potential costs and benelit s of WTO membership . The analyses is made based on Ethiopian social accounting matrix (SAM) of 200112002 constructed b y World Bank. The model is simulated for alternative policies scenarios (import tariff reduction) depicting full and in discriminating liberalization. Gradual and rationalized liberalization and instantaneous tariff liberalization. The simulation experiment suggest that the impact of trade liberalization ha s mixed effect on the Ethiopian economy . Import tariff reduction is likely to increase domestic production and expo rt of commodities particularly produced in agriculture and service sector. It also increase gross domestic product of the country but it is not large as stated by man y financial institutes Such as World bank. IMF and WTO . On the other hand . tariff reduction has negative effect on government revenue investment and on terms or trade. The result shows there is reduction in investment which is opposite to the expectation. There is a cap it al flight form the country and it is al so disincentive for investors. The Government \Revenue reduction in the short run is high. In addition to this the industrial sector shows reduction in production because of more competition from abroad (due to protection reduced in this sector An import ant policy implication o f this analysis is that the successes of trade liberalization critically depend on strategic the government should set and improvements in the institution of the country.