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8/14/2019 Rocchi Romano Red
1/15
FAO Project GCP/SYR/006/ITA Workshop - Damascus, 1-2 July 2008
Agriculture and EconomicReform in Syria: Impactson Poverty and Inequality
Benedetto Rocchi and Donato Romano
Department of Agricultural and Resource Economics
University of Florence
with the collaboration of the Rural Development Division at NAPC
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Objectives
A SAM of the Syrian economy:- households accounts (rural vs. urban,
income deciles)
- activities accounts (agriculture, food
processing)
Policy simulation assessment:
- policy reform (social market economy)
impacts on poverty and inequality
- changing environment: e.g. soaring food
prices impacts on poverty and inequality
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Account classification
41 activities (from the NAPC Farming Systems Study + CBSdata) 25 crops
3 livestock
13 non-agricultural activities (8 food processing + 5 other acts.)
51 commodities (from the NAPC Farming Systems Study +CBS data) 23 crops
8 animal products
13 agricultural processed products
7 other products
22 institutions (from the SPC-UNDP Poverty Study + CBSdata) 10 rural households (per income deciles)
10 urban households (per income deciles)
firms
government
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Account classification
3 value added (from CBS + IMF data) hired labour
other factors
net fiscal revenue (taxes subsidies)
2 capital formation (from CBS data)
inventory change investment
3 rest of the world (from CBS data) goods and services (current account)
financial flows (capital account)
net lending (lending borrowing)
TOTAL: 122 accounts
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SAM structure51 41 3 20 1 1 2 3
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Definition of policy reform
scenarios change in existing (sector) policies towards a
less distorted environment: dropping subsidies to agriculture and food processing
production reducing by 20% the price of strategic crops
abolishing the Price Stabilization Fund (food consumption
subsidy)
alternative use of budget saving: fiscal deficit reduction (= investment)
public expenditure increase (proportional to the current
composition)
increase transfers to households
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Policy reform impacts
output incomes povertyelimination of subsidies to agriculture
deficit reduction 3.79 2.45 -0.24
publ exp increse 2.03 1.43 -0.15
tranf to hhold increase 3.06 7.13 -0.92
price reduction for strategic crops
deficit reduction 0.55 0.47 -0.05
publ exp increse 0.33 0.34 -0.04
tranf to hhold increase 0.46 1.07 -0.14
elimination of PSF
deficit reduction 0.43 -2.10 0.51
publ exp increse -0.40 -2.58 0.55
tranf to hhold increase 0.09 0.10 0.19
% impact on
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8/15FAO Project GCP/SYR/006/ITA Workshop - Damascus, 1-2 July 2008
Policy reform impacts onoutput
% impact on output ofagriculture food
process.other
activitiestotal
A) elimination of subsidies to agriculture and food processing
1. deficit reduction 1.19 2.16 4.67 3.79
2. public expenditure increase 0.59 0.99 2.52 2.033. transfers to households increase 2.79 4.16 3.00 3.06
B) price reduction for strategic crops
1. deficit reduction 0.21 0.37 0.67 0.55
2. public expenditure increase 0.14 0.22 0.39 0.33
3. transfers to households increase 0.42 0.63 0.45 0.46
C) elimination of Price Stabilization Fund
1. deficit reduction -0.80 -1.02 0.92 0.43
2. public expenditure increase -1.57 -0.09 -1.87 -0.40
3. transfers to households increase -0.04 -0.07 0.14 0.09
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Policy reform impacts onincome
% impact on incomes of
urbantotal
urban 1st dec
urban 10thdec
ruraltotal
rural1st dec
rural 10th
dec
A) elimination of subsidies to agriculture and food processing
1. deficit reduction 2.52 2.29 2.61 2.35 2.28 2.55
2. public expenditure increase 1.55 1.67 1.56 1.26 1.26 1.36
3. transfers to HHs increase 8.35 14.96 6.92 5.32 6.85 3.87
B) price reduction for strategic crops
1. deficit reduction 0.46 0.47 0.45 0.48 0.52 0.45
2. public expenditure increase 0.34 0.39 0.31 0.34 0.38 0.29
3. transfers to HHs increase 1.22 2.11 1.01 0.86 1.11 0.62
C) elimination of PSF
1. deficit reduction -1.41 -5.24 0.10 -3.12 -6.84 -0.39
2. public expenditure increase -1.87 -5.54 -0.40 -3.64 -7.32 -0.95
3. transfers to HHs increase 1.34 0.74 2.13 -1.72 -4.68 0.23
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Policy reform impacts onpoverty
deficit
red.
public
xpincr.
transf
to hhs.incr.
deficit
red.
public
xpincr.
transf
to hhs.incr.
deficit
red.
public
xpincr.
transf
to hhs.incr.
Urb dec 1 -0.01 0.00 -0.04 0.00 0.00 -0.01 0.02 0.02 0.00
Urb dec 2 -0.12 -0.08 -0.52 -0.02 -0.02 -0.07 0.21 0.23 0.02
Urb dec 3 -0.28 -0.18 -1.20 -0.06 -0.04 -0.17 0.37 0.42 -0.06
Urb dec 4 -3.41 -2.20 -14.62 -0.66 -0.50 -2.11 4.14 4.71 -1.15
Rur dec 1 0.00 0.00 -0.01 0.00 0.00 0.00 0.01 0.01 0.01
Rur dec 2 -0.14 -0.08 -0.43 -0.03 -0.02 -0.07 0.34 0.37 0.20
Rur dec 3 -0.46 -0.26 -1.46 -0.10 -0.07 -0.23 1.11 1.21 0.64
Rur dec 4 -3.19 -1.78 -9.32 -0.68 -0.50 -1.48 6.90 7.56 4.01
Total -0.24 -0.15 -0.92 -0.05 -0.04 -0.14 0.51 0.55 0.19
elimination of
subsidies to agri-food
price reduction for
strategic cropselimination of PSF
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Soaring cereal prices:redistributive effects
deficit
red.
public
xp incr.
transf to
hhs.
incr.
deficit
red.
public
xp incr.
transf to
hhs.
incr.
deficit
red.
public
xp incr.
transf to
hhs.
incr.
Urb dec 1 0.08 5.59 17.08 4.24 5.42 14.29 -6.01 -5.69 1.65
Urb dec 2 -2.93 0.45 11.41 -4.28 -3.54 6.38 -7.40 -7.26 -2.17
Urb dec 3 -4.79 -1.24 13.13 -10.12 -9.32 4.95 -5.37 -5.22 0.80
Urb dec 4 -3.75 1.12 14.92 -5.54 -4.47 8.36 -4.26 -3.99 2.70
Urb dec 5 -2.96 3.64 22.74 -5.44 -3.96 13.94 -3.26 -2.85 7.25Urb dec 6 -1.05 1.57 6.13 -0.75 -0.18 4.13 1.08 1.26 3.97
Urb dec 7 2.79 3.40 1.69 1.77 1.95 1.80 1.79 1.87 2.43
Urb dec 8 6.26 5.89 1.44 3.16 3.19 1.95 6.92 7.01 7.34
Urb dec 9 16.63 16.68 9.61 12.80 13.05 11.47 18.45 18.76 22.22
Urb dec 10 74.24 61.66 1.76 70.05 68.14 28.01 54.27 54.48 51.65
Rur dec 1 -0.79 -0.67 -0.36 4.67 4.61 2.09 -10.37 -10.47 -10.72
Rur dec 2 -4.51 -3.55 0.02 0.90 1.00 0.90 -11.44 -11.52 -11.41
Rur dec 3 -5.09 -3.43 0.08 2.41 2.63 1.73 -12.03 -12.07 -11.94Rur dec 4 -6.57 -6.27 -1.59 -3.54 -3.59 -2.21 -12.29 -12.44 -12.88
Rur dec 5 -7.37 -7.64 -5.72 -2.27 -2.48 -4.47 -10.02 -10.20 -12.40
Rur dec 6 -13.27 -14.09 -10.79 -6.95 -7.37 -9.80 -8.68 -8.92 -12.97
Rur dec 7 -11.83 -12.44 -10.30 -7.34 -7.67 -9.78 -5.22 -5.41 -9.31
Rur dec 8 -15.70 -18.19 -18.05 -16.02 -16.76 -19.17 -3.64 -3.97 -10.99
Rur dec 9 -10.65 -13.82 -19.02 -10.88 -11.71 -17.87 3.59 3.32 -4.35
Rur dec 10 -8.76 -18.66 -34.19 -26.87 -28.96 -36.69 13.91 13.30 -0.84
Tot abs value 985 1 103 7 172 629 637 1 293 7 575 7 501 7 406
elimination of subsidies to
agri-food
price reduction for
strategic cropselimination of PSF
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The impact on poverty ofsoaring cereal prices
no yes
elimination of subsidies to agriculture
deficit reduction -0.24 0.25
publ exp increse -0.15 0.35
tranf to hhold increase -0.92 -0.42
price reduction for strategic crops
deficit reduction -0.05 0.45
publ exp increse -0.04 0.46
tranf to hhold increase -0.14 0.36
elimination of PSF
deficit reduction 0.51 1.00
publ exp increse 0.55 1.05
tranf to hhold increase 0.19 0.68
cereal price increase
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Conclusions
The estimated SAM for Syria is a suitabletool for policy impact simulations
Policy lessons: crucial role of Government budget strategies on the
outcomes of a given sector policy (reform) importance of output growth for poverty reduction
existence of structural asymmetries in income
distribution (e.g. rural vs. urban)
Limitations: static model: only short-run impacts
the classification of household groups by deciles may
change as a consequence of simulated policies
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Conclusions
Future developments: analyze alternative policy mixes
- less extreme policy mixes
- impact of debt service of production loans on HHs
- decrease in oil production
foreign exchange
access to international food market
alternative classification criteria for households sector
(sector of occupation of the reference person, education
level, composition of the households total income)
regional disaggregation of the Syrian SAM CGE
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The impact of an exogenousshock
in d u st r ie s fa c to rs h o u s e h
industr ies
in ter industr
f lows
househ
consump
fac tors
i n c ome
dis t r ibut ionfac to rs
h o u s e h o l d s
i n c ome
dis t r ibut ion
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