Trade and Industry

Monday, 01 December 2003

Winners and Losers in Prospect and Retrospect a Policy Agenda on Trade, Employment and Poverty in Southern Africa

  • Year: 2003
  • Author(s): David Evans
  • Countries and Regions: Southern African Development Community (SADC), Zambia

The first section sketches the well-known argument that there is a potential clash between trade policy reform, employment creation and poverty alleviation in the context of economic integration in Southern Africa. The argument is developed in the wider context of the endowments and accumulation of key resources in Sub Saharan Africa since 1960 and the consequences for the pattern of trade and growth. Unilateral and multilateral approaches to trade policy liberalisation are then discussed in the context of some macro structural characteristics of Southern Africa. The known wide disparities in the level of development between countries sharpen the potentially uneven distribution of benefits of trade policy liberalisation, whether unilateral or multilateral.

Section 2 looks at some of the early research on the employment impact of economic integration in Southern Africa, the Southern African Development Community Free Trade Area. The early datasets used to estimate the employment and later, welfare response to different strategies towards economic integration, highlighted many of the issues that have been subsequently researched using better data and better economic policy models. Principally, the early results showed wide variability of the distribution of gains from a SADC FTA both within and between countries. However, because of data gaps and unreliability and the use of simpler models, the particular findings were always subject to strong qualification.

In section 3, the 1997 dataset from the Global Trade Analysis Project (GTAP) was used to develop the general arguments about resource endowments for Sub Saharan Africa discussed in section 1 in the context of a detailed analysis of the structural characteristics of seven SADC countries. The argument was further developed using the GTAP standard Computable General Equilibrium (CGE) model to explore the poverty and employment impact of unilateral, regional and global trade policy reform packages. Detailed calculations of poverty impacts were only possible for Zambia. It was found that the unilateral trade policy reforms in Southern Africa had powerful welfare and employment benefits, as did global reforms. Regional reforms such as the SADC FTA had useful but much smaller benefits. Typically, the country results were polarised with the weaker countries benefiting least from the reform packages