Nº 134 (July, 2012). Alessandro Nicita, Marcelo Olarreaga & Guido Porto.

“Pro-poor trade policy in Sub-Saharan Africa”.

The objective of this paper is to estimate the potential pro-poor bias in the existing structure of protection in six Sub-Saharan African (SSA) countries (i.e., whether it redistributes income from rich to poor households). We also explore the extent to which the barriers faced by SSA exporters in the rest-of-the-world are biased in favor of poor or rich household. To this end, we start with a simple agricultural household production model and propose an extension to include adjustments in labor income associated with changes in unskilled and skilled wages. We then build indicators that capture the differences in welfare changes across income levels associated with the elimination of SSA’s own trade protection, as well as trade protection on SSA’s export bundle by the rest-of-the-world. Results suggest that SSA’s own trade policy is biased in favor of poor households. In contrast, the trade policies of SSA’s trading partners tend to be biased in favor of SSA’s rich households, especially when ad-valorem equivalents of NTMs are taken into account.

JEL Code: F13, F16