A GENERAL EQUILIBRIUM-BASED SOCIAL POLICY MODEL FOR CÔTE D´IVOIRE

1. A GENERAL EQUILIBRIUM-BASED SOCIAL POLICY MODEL FORCÔTE D´IVOIRE Ngee-ChoonChia Sadek M. Wahba John Whalley 1992

2. Introduction • Social Policymodel • Poverty-reductiontargetingprograms • Conclusions Outline

3. INTRODUCTION

4. ECONOMY • Population: 12 million (1989) • French Colony • Key Member of the West AfricanMonetaryUnion SOCIAL POLICY MODEL CÔTE D´IVOIRE

6. General EquilibriumModel • Objective: • Assessment of the social consequences of theadjustmentprogramssince 1981. • Characteristics: • Basedon SAM • Focusesonincomesand distribution • Operation of theunderlying real economy • Predictions of whatislikelytohappenwhenchanges are introduced. • Weaknesses: • Doesn´t capture macro imbalances • Can´t capture effectsoninfraestructure and social development(education, health) SOCIAL POLICY MODEL CÔTE D´IVOIRE

7. SOCIAL POLICY MODEL CÔTE D´IVOIRE

8. SOCIAL POLICY MODEL CÔTE D´IVOIRE

11. ArmingtonAssumption • Final productstradedinternationally are differentiatedonthebasis of thelocation of production • In one country eachindustry produces onlyoneproduct – thisisdistinctfromtheproduct of thesameindustryfromanother country • Accomodates ‘Cross-hauling’ – a problem in CGE models Armington

12. SOCIAL POLICY MODEL

15. Incidence of Taxes

16. Effectiveness of Poverty-ReducingTargetingPrograms

17. Poverty-ReducingTargetingprograms Anytranferschemeto reduce povertywill be at expense of someothergovernementexpenditure (trade-off) • Social expenditurePrograms = highest share of total governmentexpenditure

19. Poverty-ReducingTargetingprograms

20. Poverty-ReducingTargetingprograms

21. Poverty-ReducingTargetingprograms PERFECT TARGETING Poverty Line

22. Poverty-ReducingTargetingprograms UNIVERSAL TARGETING

23. Poverty-Reducing Targeting programs Amount needed to eliminate poverty (T)

24. Poverty-Reducing Targeting programs UNIVERSAL TARGETING PERFECT TARGETING In the case of perfecttargetingtheporverty-reductionprogramwouldrepresent3% of GDP

26. GENERAL EQUILIBRIUM ANALYSIS • Targeting programs would shift the function upwards • Funds distributed to all households simultaneously or individually

27. GENERAL EQUILIBRIUM ANALYSIS

28. GENERAL EQUILIBRIUM ANALYSIS • GE effects • UniversalisticApproach Tranfer: Tax:

29. GENERAL EQUILIBRIUM ANALYSIS

31. GENERAL EQUILIBRIUM ANALYSIS Universal Targeting vs. Individual targeting Individual Total poverty for the group not eliminated Effects the final income of other households through inter-house transfers Universal • Better for agricultural households • Has the greater poverty reducing effect (if directed to correct households) • Leakage effects

32. GENERAL EQUILIBRIUM ANALYSIS • Size of Transfer

33. GENERAL EQUILIBRIUM ANALYSIS • PoliticalImplications

34. CONCLUSION

35. QUESTIONS?