Domestic agricultural value chain development and pro-poor growth: A computable general equilibrium microsimulation application for the Democratic Republic of Congo

Abstract

The economy of the Democratic Republic of Congo has gained momentum between 2003 and 2015, with a high annual growth rate of over 6%. However, poverty and employment outcomes were relatively poor, while inequality increased. This study uses a computable general equilibrium (CGE) microsimulation model to study the pro-poor effect of alternative growth strategy that is likely to strengthen the competitiveness of agro-food products from the Congo. We experimented with three different scenarios: labor productivity growth, marketing efficiency, and transportation efficiency. The simulations demonstrated that improving the productivity of workers in agro-food industries has not only produced strong relative pro-poor effects, but also has the potential to lead to income convergence between rich and poor households. The analysis also revealed the underestimated contribution of agro-food marketing and transportation efficiency. The major finding is that marketing efficiency favors the middle class. Efficiency gains in the transportation of agro-food products generate strong pro-poor effects in absolute and relative terms and are likely to be particularly effective in leading to income convergence. This policy has the potential not only to increase income and employment, but also to provide positive price impacts for both producers and consumers and benefits to all households, particularly low-income households.