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xx SUMMARY


age points. And a 40 percent increase in sugar prices would reduce poverty among sugarcane growers by 20 percentage points, largely because they are poor and highly dependent on sugarcane income.


However, the effect of each of these price increases on national poverty would be very small. The higher wheat price would lower national poverty by 1 percentage point, while higher rice and fruit and vegetable prices would raise national poverty by 1 percentage point. The effect of higher prices of cotton and sugarcane on the national poverty rate would be negligible (less than 0.5 percentage points). Finally, a 40 percent increase in all five com- modity categories would increase poverty in urban and rural areas, though by just 1–2 percentage points. Unlike Egypt, Tunisia maintains high tariffs on many products, including agricultural commodities. At the same time, Tunisia has a relatively good invest- ment climate, which contributed to significant inflows of foreign direct invest- ment and a healthy growth rate through the 1990s. Tunisia’s main exports are olives and dates, while its principal imports are wheat and maize. In order to study the distributional impact of trade liberalization in Tunisia, we use a CGE model linked to survey data for 397 representative households. The model is used to simulate the elimination of industrial tariffs on goods from the E.U., the removal of all tariffs on imports from the E.U., the elimination of all tariffs from all countries, and the elimination of all tariffs combined with global liberalization, which it is assumed would raise world agricultural prices by 15 percent. Domestic trade liberalization would have the largest positive effect on GDP, but the fourth scenario (global trade liberalization) would have the most positive effect on agriculture and poverty. In this scenario, poverty would decline to its lowest level among the four scenarios. Syria has one of the most highly regulated economies in the region. Reforms in recent years have only begun to dismantle some of these restric- tions. Although Syria has been successful in achieving wheat self-sufficiency and promoting cotton exports, these accomplishments have come at a high cost in terms of inefficiency and an unsustainable fiscal burden. The likely depletion of oil reserves is forcing the government to reduce costs and find new sources of revenue. We use a CGE model to simulate the effect of lib- eralizing wheat markets on households in 10 income categories. The macro- economic effects would be relatively modest, although government savings would increase by almost 3 percent of GDP. Complete liberalization would reduce the producer price of wheat by about 17 percent and production by about 2 percent. The effects of subsidy removal on Syrian households would be regressive in the sense that high-income households would gain, while low- er-income households would lose. The size of the effects, however, would be less than 1 percent of the base income of all but the richest income group.


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