Agriculture trade liberalization and potential sectoral and welfare gains for Pakistan

Abstract

The study employed the latest developed MyGTAP model to calculate the effects of agricultural trade liberalization on the different sectors of the economy. In order to calculate the effects of agricultural trade liberalization on income distribution and economic growth, an analytical framework MyGTAP was developed where the standard GTAP model was linked with the latest available Social Accounting Matrix (SAM). The overall results show that the agriculture trade liberalization, modeled via a series of multilateral, bilateral as well as sectoral scenarios between Pakistan and the rest of the world, will cause a significant increase in economic growth. Despite some limitations, the Global CGE model developed in this study produces plausible results that would help to shed some light on the current debate about the trade liberalization effects on income inequality in Pakistan. The study used total three separate simulations. The results of the simulations suggest that manufacturing industries tend to increase the economic growth and to increase welfare across somewhat all household types.