A Simulation Analysis of the Impact of Phasing - out of Export Subsidies by the OECD on Sub - saharan Exports: The Case of Animal and Animal Products
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Date
2007-07
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A.A.U
Abstract
This study is set out to simulate the impact of phasing out of export subsidies by the GECD on the exports
of animal and animal products in Sub-Saharan Africa. The global trade of animal and animal products
has been increasing Significantly over the past 20 years although the share of SSA has been low. The
number of SSA countres that are net importers of animal and animal products has increase over the
years owing to a large increase in imports of animal and animal products among themselves and with the
rest of the world. The simulation analysis in the paper is done using two models. The first model is
ATPSM and is developed by FAG and UNCTAD for the purpose of simulating trade
policies. 1t is a partial equilibrium static model. The first scenario to be simulated is 36% reduction in
market access, 21% reduction in domestic support and a 100% reduction in export competition. The
results reveal that this would result in a 7% increase in exports of animal and animal products by SSA
countries. For the second scenario only the phasing out of expo'-t subsidies by 100% was wl1en and this
resulted in a 2% increase in the exports of animal and animal products by SSA. The second model is an
export model estimating using a panel data from 42 SSA countries and 21 years. This model tal1es
production capacity, domestic price index, price of exports, export price of trading partners and income of
trading partners as explanatory variables to determine exports. Although the theoretical framework
defines a simultaneous estimation, test for endogeniety indicated that the model should be estimated with
GLS. After estimating with a panel corrected standard errors the results of the model showed that the
only variables affecting the value of exports are real GOP (substituting production capacity) and unit
value of exports (substituting for price of exports). Given the result from the two models it can be seen
that the changes in trade policies by GECD countries doesn't significantly c1wnge tile exports of the SSA
countries. This calls for-more inward 100l1ing policies where it becomes imporetant to enhance production
capacity and improve institutions and infrasinucture.
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Keywords
Animal and Animal Products, Exports, Impact