Phasing out energy subsidies as part of Egypt’s economic reform program: Impacts and policy implications

Breisinger, Clemens; Mukashov, Askar; Raouf, Mariam; Wiebelt, Manfred 2018
In order to address long-standing economic challenges, in 2016 the Government of Egypt (GOE) put in place a major economic reform program to restore macroeconomic stability and to promote inclusive growth. As a result, there are early signs that the economy is rebounding and Egypt’s economic outlook is becoming more favorable. However, it is less clear how the ongoing reform program is affecting households, especially the poor. To shed light on this question, this paper uses an economy-wide model to estimate the distributional impacts of the energy subsidy cuts in 2014, 2016, and 2017, the currency devaluation at the end of 2016, and the expected complete phasing out of energy subsidies over the coming years.

     The role of agriculture and agro-processing for development in Tunisia

Figueroa, Jose Luis; Mahmoud, Mai; El-Enbaby, Hoda 2018
This paper is part of a series of three country-case studies to investigate the potential role of agro-processing for economic development based on the strong backward and forward linkages agro-processing firms have with the agricultural sector. Previous analyses for Egypt and Jordan (Figueroa, Mahmoud, and Breisinger 2017; El-Enbaby et al. 2016) have shown how developing the agro-processing sub-sector as well as encouraging the production of high-value crops can promote economic and social well-being, especially in rural areas where the majority of the poor are concentrated. In continuation with this line of research, this paper aims at analyzing: • What role agriculture has played for the Tunisian economy in recent years; • What is the role of agricultural productivity and structural change in fostering agricultural growth in Tunisia; and • What is the potential of agro-processing for economic development and rural transformation in the country.

     The (Arab) Agricultural Investment for Development Analyzer (AIDA): An innovative tool for evidence-based planning

Raouf, Mariam; Kassim, Yumna; Kurdi, Sikandra; Mogues, Tewodaj; Mahmoud, Mai; Randriamamonjy, Josée; Thurlow, James; Wiebelt, Manfred; Breisinger, Clemens 2018
This paper describes an innovative agricultural and rural economic planning tool that will help governments and analysts in the design of agricultural investment plans: the (Arab) Agricultural Investment for Development Analyzer (AIDA). A policy challenge for all governments, including those in the Middle East and North Africa, is determining the appropriate allocation and quality of public spending to foster agricultural and rural economic growth, employment creation, and poverty reduction. The AIDA economic planning toolkit has been built using an economy-wide and minimalistic investment data approach to assist governments in meeting this planning challenge. Centered on the use of economy-wide Computable General Equilibrium (CGE) models, it allows for a comprehensive planning approach to ensure that the level and allocation of investment in the agriculture and rural sectors is sufficient for achieving desired targeted outcomes. It does this by linking agricultural and rural spending to economic growth, job creation, and household poverty, given resource and market constraints, as well as considering trade-offs and opportunity costs associated with different investment options. Such a holistic system approach enables the ranking of possible interventions and allocations of public funds amid possible changes in public policy to help in designing national agriculture plans and targets.

     The role of agriculture and agro-processing for development in Jordan

Figueroa, Jose Luis; Mahmoud, Mai; Breisinger, Clemens 2018
This paper aims to support the implementation of the strategic development plans of Jordan by analyzing the role of agriculture and farmers in the Jordanian economy, the role that productivity and structural change can play for fostering agricultural growth, and the role agro-processing may play in Jordan’s economic development. We argue that the development of the agro-processing sector often has stronger backward and forward linkages with the agricultural sector than other sectors and, thus, plays an important role for rural transformation.

     Linking the economics of water, energy, and food: A nexus modeling approach

Al-Riffai, Perrihan; Breisinger, Clemens; Mondal, Md. Hossain Alam; Ringler, Claudia; Wiebelt, Manfred; Zhu, Tingju 2017
We use an innovative methodology to model the socioeconomic linkages between water, energy, and food in the East Nile Basin. Based upon a theoretical nexus framework, the methodology is expanded into a quantifiable modeling suite that under-lies the analysis of each of three country case studies. The advantages are that, despite resource shortages being a challenge, the modeling suite aids in devising policies and strategies that formulate these sectoral interdependencies and provide the evidence-based research results necessary for their design in a way that exploits synergies existing across sectors, countries, and regions (Al-Zubari n.d.). This paper lays out the methodology and gives an example of an application and scenarios by focusing on three countries in the East Nile Basin. This methodology paper will be followed by three individual country case studies that highlight the water, energy, and food nexus for each.

     Why can’t MENA countries trade more?: The curse of bad institutions

Karam, Fida; Zaki, Chahir 2017
This paper explores the relationship between institutions and trade in the Middle East and North Africa (MENA) region. The literature offers a broad consensus that bad institutions hamper trade and that trade liberalization engenders institutional reforms; however, MENA has generally been neglected in this literature, even though most countries in the region suffer from a clear deficit of “good” institutions. Taking into account the inverse relationship between institutions and trade, we use a gravity model that explains bilateral trade for disaggregated goods and service sectors for 21 MENA countries over the period 1995-2014. Our results show that in the presence of excessive zero trade observations, poor institutions can be considered as fixed export costs that help explain the zero probability of trade for some countries. We find that institutions do matter for trade after controlling for the endogeneity problem between institutions and trade.

     Addressing transboundary cooperation in the Eastern Nile through the Water-Energy-Food Nexus: Insights from an E-survey and key informant interviews

Berga, Helen; Ringler, Claudia; Bryan, Elizabeth; ElDidi, Hagar; Elnasikh, Sara 2017
The Nile is the lifeblood of northeastern Africa, and its roles for and interdependency with the national economies it traverses and binds together grow as it moves from source to sea. With rapid economic development—population growth, irrigation development, rural electrification, and overall economic growth—pressures on the Nile’s water resources are growing to unprecedented levels. These drivers of change have already contributed to stark changes in the hydropolitical regime, and new forms of cooperation and cross-sectoral collaboration are needed, particularly in the Eastern Nile Basin countries of Egypt, Ethiopia, Sudan, and South Sudan. As direct sharing of water resources is hampered by unilateral developments, the need has increased for broader, cross-sectoral collaboration around the water, energy, and food sectors. This study is conducted to assess and understand the challenges of and opportunities for cooperation across the water-energy-food nexus nationally in Egypt, Ethiopia, and Sudan, as well as regionally across the Eastern Nile. To gather data, the paper uses an e-survey supplemented with key informant interviews geared toward national-level water, energy, and agriculture stakeholders, chiefly government staff and researchers. Findings from the survey tools suggest that most respondents strongly agree that collaboration across the water, energy, and agriculture sectors is essential to improve resource management in the region. At the same time, there is ample scope for improvement in collaboration across the water, energy, and food sectors nationally. Ministries of water, energy, and food were identified as the key nexus actors at national levels; these would also need to be engaged in regional cross-sectoral collaboration. Respondents also identified a wide range of desirable cross-sectoral actions and investments—both national and regional—chiefly, joint planning and operation of multipurpose infrastructure; investment in enhanced irrigation efficiency; joint rehabilitation of upstream catchments to reduce sedimentation and degradation; and investment in alternative renewable energy projects, such as wind and solar energy.

     An agriculture- and trade-focused social accounting matrix for Tunisia, 2012

Thabet, Chokri 2016
The purpose of this paper is to document the different steps followed to construct the Tunisian Social Accounting Matrix (SAM) for the year 2012. More precisely, it describes the estimation methods and the nature of data used in the development of the SAM, which has a specific focus on the agriculture and food sectors. The SAM also features a regional disaggregation by three agro-ecological zones. The data used in the construction process are based on two main publications of the “Institut National de la Statistique” (INS): the input-output table (I/O) (2012) and the supply-use table (2012). The I/O (2012) disaggregates the Tunisian economy into 24 sectors, including two agri-food sectors: (1) Agriculture and Fishery, and (2) Food Industries. The supply-use table accounts for about 400 commodities, of which 59 are agriculture, forestry, and fishery products and 64 are processed-food products. Other major information sources used include the household survey publication (2010), the annual report of the Central Bank (2013), the “Annuaire des Statistiques Agricoles” (Ministry of Agriculture 2013c), and the “Budget Economique” (2013).

     Prioritizing development policy research in Egypt: An innovative approach to inform IFPRI’s Egypt Strategy Support Program

Abdelaziz, Fatma; Al-Riffai, Perrihan; Breisinger, Clemens; Dorosh, Paul A.; Ecker, Olivier; ElDidi, Hagar; El-Enbaby, Hoda; Figueroa, Jose Luis; Kenawy, Laila; Leroy, Jef L.; Minot, Nicholas; Spielman, David J.; Trinh Tan, Jean-François; Zhang, Xiaobo 2016
This paper presents an innovative approach to prioritizing development policy research in Egypt with the specific objective of informing the research agenda of the Egypt Strategy Support Program of the International Food Policy Research Institute. The key steps in this process were: 1) a review of relevant priority setting methods and existing government strategies, 2) pre-selection of research themes, 3) selection of national and international experts, 4) design and conduct priority setting workshop; and 5) priority matrix construction and paper writing.

     A disaggregated social accounting matrix: 2010/11 for policy analysis in Egypt

Al-Riffai, Perrihan; Moussa, Suzane; Khalil, Amani; Hussein, Fayza; Serag, Eman; Hassan, Naglaa; Fathy, Ahmed; Samieh, Asmaa; ElSarawy, Mahmoud; Farouk, Embareka; Souliman, Saad; Abdel-Ghafour, Amani 2016
The Central Agency for Public Mobilization and Statistics (CAPMAS) is pleased to present a disaggregated version of the Egypt SAM for 2010/11. This new SAM builds on the previous SAM 2010/11 built and published by CAPMAS with the support of the International Food Policy Research Institute (IFPRI). The value added of this new disaggregated version of the SAM is its focus on the agricultural sector and different types of households. By disaggregating the single agricultural sector into 22 agricultural sub-sectors and the single household of the previous SAM into 20 household groups, defined by expenditure decile and rural or urban residence, the disaggregated SAM now allows for analyzing agricultural issues at the detailed crop level and to better understand the potential im-pacts of policy changes for both better off and more vulnerable households.

     Analyzing trade integration in North African markets: A border effect approach

Chebbi, Houssem Eddine; Abbassi, Abdessalem; Tamini, Lota D. 2016
This paper uses the border effect estimate from a gravity model to analyze the level of market trade integration among Algeria, Egypt, Mauritania, Morocco, and Tunisia from 2005-2012. We analyze total trade as well as trade in agricultural and industrial products. The border effect estimates show that crossing a national border within these North African countries induces a trade-reduction effect. The highest effect is for Algeria, with total trade being reduced by a factor of 5 in 2011-2012, while the lowest effect is for Tunisia, with the total trade being reduced by a factor of 2 in 2011-2012. Our results also show that the border effect is stable over time. The mean value masks differences that are quite substantial in market integration when considering agricultural products or industrial products, the borders effects being lower for the latter. For industrial products in 2011-2012, the highest border effect is in Tunisia, with a factor of 3.3, and the lowest border effect is for Morocco with a factor of 1.9. For agricultural products in the same period, the highest border effect is in Algeria, with a factor of 5.9, and the lowest border effect is in Egypt, with a factor of 2.9. Finally, the equivalent tariffs implied by the estimated border effects are not implausible compared to the actual range of direct protection measures. Integration of the North African market should be pursued by improving structural policies to improve trade efficiency and reap the benefits of international trade.

     Trade performance and potential of North African countries: An application of a stochastic frontier gravity model

Tamini, Lota D.; Chebbi, Houssem Eddine; Abbassi, Abdessalem 2016
The objective of this paper is to analyze trade potential versus actual realized trade among North African trading partners. Following the literature on production economics, we built a stochastic frontier gravity model. The underlying assumption is that all deviations from trade potential is not due to white noise but may also be due to inefficiencies. Time-variant country-specific trade efficiency estimates are obtained and analyzed. Our results indicate that Mauritania, as a country both of destination and of origin, is where the region’s trading relationship is the least efficient. Tunisia, followed by Morocco, faces the fewest behind- and beyond-the-border effects. Our analysis of market integration and trade efficiency at the disaggregated level indicates that trade efficiency scores exhibit high variability between categories of products. Moreover, North African market integration is worst when considering the goods from “Textiles; Footwear & Headgear” category. Our estimates indicate that trade efficiency for agricultural products is relatively low, indicating the existence of significant behind- and beyond-the-border inefficiencies. Our estimates also underline the importance of improving domestic policies to encourage entrepreneurial development and business facilities.

     The role of agriculture and the agro-processing industry for development in Egypt: An overview

El-Enbaby, Hoda; Figueroa, Jose Luis; ElDidi, Hagar; Breisinger, Clemens 2016
In order to complement the ongoing macroeconomic and safety net reforms in Egypt, it is important to foster additional sector-specific economic growth, especially in sectors that are good at creating jobs and reducing poverty. One sector that may help foster socioeconomic development in coming years is agriculture and related agro-processing industries. This paper shows that agriculture in Egypt continues to play a relatively important role in the economy compared to other mid-dle income countries. The sector’s stable growth performance has proved to be a reliable contributor to economy-wide output growth over the past decades. The underlying productivity gains have prevented the country’s food import depend-ency ratio from rising in spite of rapidly growing food demand.

     Policy changes in times of crisis: Evidence from the Arab Spatial Policy Analyzer

Bordignon, Jacopo; Breisinger, Clemens 2015
The paper introduces and demonstrates different uses of the Arab Spatial Policy Analyzer (ASPA), a new online policy database for the analysis of food and nutrition security in the Middle East and North Africa region. Using the ASPA database, we assess the nature of policy activity throughout the Arab region, specifically during the 2008 global food price crisis and the 2011 social uprisings. The ASPA is a means for identifying broadly those policy areas where governments are active and can help analysts, researchers, and decisionmakers discern what policy actions governments are undertaking to bring about stability and prosperity for their people. The ASPA database draws from a variety of sources: country reports of the Economist Intelligence Unit; datasets of the World Bank Food Price Crisis Observatory, the FAO Food and Agriculture Policy Decision Analysis Tool, and FAOLEX Legal Office; and the Global Agriculture Information Network reports of the US Department of Agriculture’s Foreign Agriculture Service. The database has several distinct features when compared to other policy monitoring tools, including a novel policy classification system and policy directions indicating either an increasing or decreasing value for determinate policy instruments—for example, an increase in food subsidies. We find that in times of crisis governments in the Middle East and North Africa region focus on “firefighting” policies that neglect both fiscal prudence and interventions with more impact, such as investments in infrastructure and targeted social protection measures.

     How did wars dampen trade in the MENA region?

Karam, Fida; Zaki, Chahir 2015
This paper investigates the effects of war on trade in the Middle East and North Africa region (MENA), an area at considerable risk for conflicts. Using an augmented gravity model, we introduce a war variable and distinguish between different types of conflicts. We run a battery of sensitivity analysis tests to control for the endogeneity problem that may arise in our estimation. The results show that, in general, wars have a significantly negative impact on trade (exports and imports); civil conflicts in particular hinder exports, imports, and overall trade significantly. The disaggregated version of the gravity model shows that non-state conflicts have a detrimental effect on bilateral trade flows in manufacturing; however, none of the conflicts modeled affect trade in services. Finally, the outcome of the gravity model for manufacturing has been used to compute ad-valorem equivalents (AVEs) of wars at the country level. We found that, on average, a conflict is equivalent to a tariff of 5 percent of the value of trade. More heterogeneity is observed at the sectoral level, where AVEs range from 4 to 65 percent.

     Measuring women’s decisionmaking: Indicator choice and survey design experiments from cash and food transfer evaluations in Ecuador, Uganda, and Yemen

Peterman, Amber; Schwab, Benjamin; Roy, Shalini; Hidrobo, Melissa; Gilligan, Daniel 2015
Despite wide use of women’s decisionmaking indicators, both as a direct measure of intrahousehold decisionmaking and as a proxy for women’s empowerment or bargaining power, little has been done to explore what such indicators capture and how effective they measure program impacts on empowerment. We review theoretical and operational evidence from recent literature on women’s decisionmaking and analyze survey experiments undertaken in cash and food transfer programs in Ecuador, Yemen, and Uganda from 2010 to 2012. We find large variations in how women are ranked in terms of decisionmaking depending on how indicators are constructed. In addition, we find that across countries, composite decisionmaking indicators are not consistently associated with other proxy measures of women’s empowerment or household welfare, such as women’s education levels or household food consumption. We also find mixed evidence across countries related to the impact of transfer programs on women’s decisionmaking indicators. We conclude with implications of our findings for future research and use of decisionmaking indicators for program evaluation in developing countries.

     Building resilience to conflict through food security policies and programs: Evidence from four case studies

Breisinger, Clemens; Ecker, Olivier; Maystadt, Jean-François; Trinh Tan, Jean-François; Al-Riffai, Perrihan; Bouzar, Khalida; Sma, Abdelkarim; Abdelgadir, Mohamed 2014
Food insecurity at the national and household level not only is a consequence of conflict but can also cause and drive conflicts. This paper makes the case for an even higher priority for food security–related policies and programs in conflict-prone countries.

     Agriculture for development in Iraq?: Estimating the impacts of achieving the agricultural targets of the national development plan 2013–2017 on economic growth, incomes, and gender equality

Al-Haboby, Azhr; Breisinger, Clemens; Debowicz, Darío; El-Hakim, Abdul Hussein; Ferguson, Jenna; van Rheenen, Teunis; Telleria, Roberto 2014
This paper estimates the potential effects of achieving the agricultural goals set out in Iraq’s National Development Plan (NDP) 2013–2017 using a dynamic computable general equilibrium model. The findings suggest that raising agricultural productivity in accordance with the NDP may more than double average agricultural growth rates and add an average of 0.7 percent each year to economywide gross domestic product during the duration of the plan. As a consequence, the economy not only diversifies into agriculture, but agricultural growth also lifts growth in the food processing and service sectors.

     Costing alternative transfer modalities

Margolies, Amy; Hoddinott, John F. 2014
Discussions regarding the merits of cash and food transfers by academics and implementers alike focus on their relative impacts. Much less is known about their relative costs. We apply activity-based costing methods to interventions situated in Ecuador, Niger, Uganda, and Yemen, finding that the per transfer cost of providing cash is always less than that of providing food. Given the budget for these interventions, an additional 44,769 people could have received assistance at no additional cost had cash been provided instead of food. This suggests a significant opportunity cost in terms of reduced coverage when higher-cost transfer modalities are used. Decisions to use cash or food transfers should consider both impacts and costs.

     Building a Social Accounting Matrix for Yemen, 2012

Al-Riffai, Perrihan; AlHawri, Mohamed; Al-Bataly, Abdulmajeed; Breisinger, Clemens; Wiebelt, Manfred 2013

     A Social Accounting Matrix for Iraq, 2011

Debowicz, Dario 2013

     Managing transition in Yemen

Breisinger, Clemens; Ecker, Olivier; Al-Riffai, Perrihan; Engelke, Wilfried; Al-Bataly, Abdulmajeed 2012
This paper has been produced to support the Government of Yemen and the international community in designing a transition plan for the country. The political crisis and conflict situation in Yemen has led to a sharp decline in economic output beginning in 2011—a decline from which Yemen is estimated to recover only in 2015, if favorable conditions apply. Moreover, the impact of the crisis on the poor is dramatic

     Does Food Security Matter for Transition in Arab Countries?

Maystadt, Jean-François; Trinh Tan, Jean-François; Breisinger, Clemens 2012
Expectations are high that transition in Tunisia, Egypt, Libya, and Yemen will bring about more freedom, justice, and economic opportunities. However, experiences from other world regions show that countries in transition are at high risk of entering conflicts, which often come at large economic, social and political costs. In order to identify options on how conflict may be prevented in Arab transition countries, this paper assesses the key global drivers of conflicts based on a dataset from 1960 to 2010 and improved cross-country regression techniques. Results show that unlike in other studies where per capita incomes, inequality, and poor governance, among other factors, emerge as the major determinants of conflict, food security at macro- and micro-levels emerges as the main cause of conflicts in the Arab world. This “Arab exceptionalism in conflict” suggests that improving food security is not only important for improving the lives of rural and urban people; it is also likely to be the key for a peaceful transition.

     Taxation policy and gender employment in the Middle East and North Africa Region

Fofana, Ismaël; Corong, Erwin; Chatti, Rim; Bouazouni, Omar 2012
Empirical evidence suggests that women are more vulnerable to chronic poverty and gender inequality is likely to condition the impacts of policies on the rest of the economy and consequently on poverty itself. While gender-responsive budgeting has made significant headway into economic policy, taxation has lagged behind. Because tax policy is the most economically direct way by which governments can influence individual behavior, requests have been made for gender-responsive tax policy that promote gender equality. This study applied to Algeria, Egypt, Morocco, and Tunisia aims to contribute to this debate by assessing the induced gender employment bias of current taxation policies in these countries. It explores the pattern of male and female employment and discusses the indirect tax distortions across sectors within each country and between countries. The possible impact of the indirect tax distortion on male and female employment is quantitatively assessed using a gender-focused computable general equilibrium model. The analysis reveals that indirect taxes, in particular import duties, are biased for female employment in Algeria and Egypt, but not in Morocco and Tunisia. Female labor–intensive industries in Algeria and Egypt are highly protected in the benchmark and are not competitive internationally so that removing protection would increase competition with cheaper import substitutes and cause the sector to contract and lay off workers. In contrast, the same female labor–intensive industries are less protected in Morocco and Tunisia. Hence, removal of indirect taxes in these countries would result in quasi-neutral effects between male and female salary and wage earnings. The taxation policies in the Middle East and North Africa region have changed over the last decade and may undergo significant changes in the coming years. In light of this unpredictability, an assessment of the tax-related relative price bias on men and women constitutes a crucial step toward providing adequate guidance to planners, policymakers, and other stakeholders.

     Climate change and floods in Yemen: Impacts on food security and options for adaptation

Wiebelt, Manfred; Breisinger, Clemens; Ecker, Olivier; Al-Riffai, Perrihan; Robertson, Richard D.; Thiele, Rainer 2011
This paper uses both a global and local perspective to assess the impacts of climate change on the Yemeni economy, agriculture, and household income and food security. The major impact channels of climate change are through changing world food prices as a result of global food scarcities, long-term local yield changes as a result of temperature and rainfall variations, and damages and losses of cropland, fruit trees, livestock, and infrastructure as a result of natural disasters such as recurrent storms and floods. Moreover, spatial variation in climate change impacts within Yemen means that such effects can vary across subnational regions. We develop a recursive dynamic computable general equilibrium (DCGE) model with six agroecological zones to capture linkages between climate change, production, and household incomes. We also capture changes in per capita calorie consumption in response to changing household expenditure for assessing changes in people’s hunger situation as a measure for food security. Given the high uncertainty surrounding future global food prices and local yields, all simulations are run under two global climate scenarios. The results of the CGE simulations suggest that climate-change-induced higher global prices for food will lower Yemen’s overall GDP growth, raise agricultural GDP, decrease real household incomes, and increase the number of hungry people. Local impacts of climate change are different for the two climate scenarios. Overall, the long-term implications of climate change (local and global) lead to a total accumulated reduction of household welfare of between US$5.7 and $9.2 billion by 2050 under MIR or CSI conditions, respectively. Moreover, between 80,000 and 270,000 people could go hungry due to climate change. Rural households are harder hit than urban households, and among the rural households the non-farm households suffer most. This household group is projected to lose an accumulated 3.5 to 5.7 billion US$ as a consequence of longer term climate change by 2050. In addition to the longer-term climate change effects, climate variability is shown to induce heavy economic losses and spikes in food insecurity. The impact assessment of the October 2008 tropical storm and floods in the Wadi Hadramout puts the total cumulated real income loss over the period 2008-12 at 180 percent of pre-flood agricultural value added. Due to the direct flood loss, farmers in the flooding areas suffer most in the year of the flood occurrence, where the percentage of hungry people living from farming spiked by about 15 percentage points as an immediate result of the flood. Action to mitigate the negative effects of climate change and variability should to be taken on the global and local level. A global action plan for improving food security combined with a better integration of climate change in national development strategies, agricultural and rural policies, and disaster risk management and social protection policies will be keys for improving the resilience of Yemen and Yemenis to climate change.

     Impacts of global change on the Nile basin

Martens, Anja Kristina 2011
This paper analyzes drivers of global change and their impacts on the current and future availability and accessibility of water resources in the Nile Basin. Drivers include changes in demography, climate, the socioeconomy, and politics, all of which are likely to increase the demand for freshwater and thus competition over its use across riparian countries. As a result of historic bilateral agreements, Egypt, as the most downstream country, uses the lion’s share of the Nile’s waters, which makes reallocation particularly difficult. Egypt is nearly totally dependent on water from upstream countries but considers any change of the status quo a threat to its national (water) security. Ninety-six percent of Egypt’s water originates outside its territory—86 percent in Ethiopia. This paper assesses the special upstream–downstream relationship in the Nile Basin and the potential for change as a result of global change. It hypothesizes that under global change, not only will water availability in the Nile Basin change but so will the current hydropolitical situation in the basin. In any case, meeting the challenges in the Nile Basin depends on cooperation among countries and regulation of competing interests and demands. Avenues for hydropolitical reform, including the Nile Basin Initiative, and the role of China and other donors or investors are discussed. The findings—that global change might well bring down the old hydropolitical regime—are confirmed by recent developments, in particular, the signing by five upstream countries of a new framework agreement for management and development of the Nile Basin.

     Global and local economic impacts of climate change in Syria and options for adaptation

Breisinger, Clemens; Zhu, Tingju; Al-Riffai, Perrihan; Nelson, Gerald C.; Robertson, Richard D.; Funes, José; Verner, Dorte 2011
There is broad consensus among scientists that climate change is altering weather patterns around the world. However, economists are only beginning to develop tools that allow for the quantification of such weather changes on countries’ economies and people. This paper presents a modeling suite that links the downscaling of global climate models, crop modeling, global economic modeling, and subnational-level computable equilibrium modeling. Important to note is that this approach allows for decomposing the potential global and local economic effects on countries, including various economic sectors and different household groups. We apply this modeling suite to Syria, a relevant case study given the country’s location in a region that is consistently projected to be among those hit hardest by climate change. Despite a certain degree of endogenous adaptation, local impacts of climate change (through declining yields) are likely to affect Syria beyond the agricultural sector and farmers and also reduce economy-wide growth and incomes of urban households in the long term. The overall effects of global climate change (through higher food prices) are also negative, but some farmers can reap the benefit of higher prices. Combining local and global climate change scenarios shows welfare losses across all rural and urban household groups of between 1.6 – 2.8 percent annually, whereas the poorest household groups are the hardest hit. Finally, while there is some evidence that droughts may become more frequent in the future, it is clear that even without an increase in frequency, drought impacts will continue to put a significant burden on Syria’s economy and people. Action to mitigate the negative effects of climate change and variability should to be taken on the global and local level. A global action plan for improving food security and better integration of climate change in national development strategies, agricultural and rural policies, and disaster risk management and social protection policies will be keys for improving the resilience of countries and people to climate change.

     Petroleum subsidies in Yemen

Breisinger, Clemens; Engelke, Wilfried; Ecker, Olivier 2011
Petroleum subsidy reform is increasingly seen as an opportunity for consolidating public finances and fostering sustainable economic development. Yemen, as the country with the lowest per capita income in the group of countries with a high level of energy subsidies, started to reduce subsidies in 2010 and is discussing further options for reform. The results of this paper support a comprehensive petroleum subsidy reform in Yemen. Economic growth is projected to accelerate between 0.1 and 0.8 percentage points annually as a result of reform. Yet, the design of the reform is critically important, especially for the poor. Outcomes of alternative reform scenarios range from an increase in poverty of 2 to 6 percentage points. A promising strategy combines subsidy reduction with direct transfers of 13,800 to 19,700 Yemeni rials annually to the poorest 30 percent of households and enhanced public investments. Investments should focus on the utilities, transport, trade, and construction sectors to integrate economic spaces and create the platform for a restructuring of agricultural, industrial, and service value chains, which should encourage private sector led and job creating growth in the medium term.

     Food security and economic development in the Middle East and North Africa

Breisinger, Clemens; van Rheenen, Teunis; Ringler, Claudia; Nin-Pratt, Alejandro; Minot, Nicholas; Aragon, Catherine; Yu, Bingxin; Ecker, Olivier; Zhu, Tingju 2010
A rapidly changing world combined with mounting domestic challenges is prompting many Middle East and North African (MENA) countries to rethink their development models and to initiate economic and social reforms. Taking this new momentum as a starting point, this paper uses the concept of Food Security to identify the region’s challenges along four major themes: economic growth and incomes, trade and infrastructure, agriculture and water, and health and education. Results show that many of the region’s longstanding challenges persist; yet taking immediate action is more urgent in light of the recent, global food, fuel, and financial crisis and projected severe impacts of climate change. Fostering development and achieving food security will require economic growth and diversification that generates jobs for the majority of people, breaking the strong vulnerability to international oil and food price volatility, managing depleting water resources and climate change adaptation effectively, transforming social policies to target the poor, and empowering women to play a more active role in the economy and society. Designing policies and investments for achieving progress in this direction are most likely to be successful if based on lessons from the past, successful countries’ experiences and research-based strategic analysis. The paper therefore concludes with a list of priority research areas to identify key actions to be taken on regional, national and sub-national levels to foster development and food security.

     Assessing food security in Yemen

Ecker, Olivier; Breisinger, Clemens; McCool, Christen; Diao, Xinshen; Funes, José; You, Liangzhi; Yu, Bingxin 2010
The lack of updated information about food security is of concern to many countries, especially during and after economic crises, natural disasters, and conflicts. In this paper we present an analytical framework for assessing the effects of such crises on food security. This methodology can compensate for the lack of recent data in the aftermath of various crisis situations and thus provide important information to policymakers. We apply this methodology to Yemen, a country where the recent food price crisis and global economic recession have been especially damaging. Little is known about how the recent triple crisis (food, fuel, and financial crisis) has affected food security and what the current state of food security is on the macro- (national) and microlevels (local). The results of our findings suggest an alarming state of food insecurity. Food security at the macrolevel has dramatically deteriorated in recent years, and it is projected that the country will remain highly vulnerable to external shocks in the future if no action is taken. At the household level we found that 32.1 percent of the population in Yemen is food insecure and that 57.9 percent of all children are malnourished. Rural-urban inequalities are high in Yemen. The number of food-insecure people living in rural areas (37.3 percent) is more than five times higher than in urban areas (17.7 percent). Underweight children and children with stunted growth are found more commonly in rural than urban areas. Major challenges for food security are the lack of job-creating growth within the oil-dependent economic structure; a distorted economic incentive system, coupled with an inefficient social transfer system rapidly depleting oil and water resources; and the growing production and consumption of qat.

     Policy options and their potential effects on Moroccan small farmers and the poor facing increased world food prices

Diao, Xinshen; Doukkali, Rachid; Yu, Bingxin 2008
"This study evaluates the potential impact of the recent rise in world food prices on the Moroccan economy and possible policy options to respond to it. The study focuses mainly on the poverty effects of such an external shock and the possible policy responses to it. A new social accounting matrix (SAM) and a computable general equilibrium (CGE) model have been developed for this study based on micro-level data in combination with sectoral and economywide data. The CGE model simulations show that while increased world food prices hurt poor consumers, the general equilibrium effect of welfare loss is modest. Agricultural producers gain, and benefits to small farmers are especially large. The simulation of import subsidies shows that while such policy options can temporarily stabilize domestic prices, the benefits to consumers are at the expense of producers. However, the model results indicate that there are win-win options for Morocco if policies are based on a longer-term objective. Direct transfers to poor consumers, combined with increased public investment in agriculture to improve agricultural productivity, is a win-win strategy that the government should consider. Low productivity in staple crop production is the dominant reason for poverty among Moroccan farmers. Improving this productivity can also benefit poor consumers by lowering domestic food prices." --from authors' abstract

     Public spending and poverty reduction in an oil-based economy

Chemingui, Mohamed Abdelbasset 2007
This study is part of a collaborative project between the International Food Policy Research Institute and the Arab Planning Institute in Kuwait on public policy and poverty reduction in the Arab region. The purpose of this paper is to assess the impact of an increase in public spending in priority areas on economic growth and poverty reduction in Yemen. To accomplish this objective, the study builds a dynamic Computable General Equilibrium model to provide a baseline scenario of changes in the economy and poverty levels in Yemen during the period 1998-2016. Alternative scenarios are then compared to isolate the specific impact of several policies on poverty. The scenarios assume an increase in public spending devoted to three priority areas (agriculture, education, and health), which affect the economy through an increase in sectoral or economy-wide technical factor productivity. Results of public spending experiments show that targeting increased amounts of public spending towards education and health services will generate more economic growth and poverty reduction than increasing public spending solely on the agricultural sector. However, when an oil sector is a prominent part of the economy, as in Yemen, additional public spending on health and education does not improve productivity in the oil sector. Therefore, spending on agriculture becomes the most important channel for poverty reduction and economic growth. While increasing public spending in priority areas appears to be the best solution available for the government to reduce poverty during the next decade, the road is still long for Yemen to be able to achieve its Millennium Development Goals for poverty reduction. Re-allocating public expenditures from defense to key sectors appears to be an additional option for reducing poverty, given the financial constraints facing Yemen. However, in the current context of terrorism concerns, it will be difficult to convince policy-makers to reduce spending on defense and security. Seeking additional resources from international donors seems to be the only option available to increase benefits from increased public spending in the priority areas identified and assessed in this study. -- from Authors' Abstract

     Could payments for environmental services improve rangeland management in Central Asia, West Asia and North Africa?

Dutilly-Diane, Celine; McCarthy, Nancy; Turkelboom, Francis; Bruggeman, Adriana; Tiedemann, James; Street, Kenneth; Serra, Gianluca 2007
Although several institutional and management approaches that address the degradation of the rangelands have been tested in the dry areas of Central and West Asia and North Africa (CWANA), impact has been limited. Nonetheless, the development of National Action Plans to combat desertification highlights the interest of governments to tackle this issue. Payment for Environmental Services (PES) may be a viable policy option, though, to date, most PES programs have focused on the management of different resources (forests, watersheds). The purpose of this paper is to examine whether PES could be a viable option to promote sustainable rangelands management in the dry rangelands of CWANA. Specifically, it focuses on the scientific gaps and knowledge related to the local and global environmental services produced by rangelands and addresses questions related to the beneficiaries of these services. Institutional conditions necessary for the implementation of such schemes are discussed.

     Defining a trade strategy for southern Mediterranean countries

Bouët, Antoine 2006
The objective of this paper is to analyze the best trade approach for Southern Mediterranean countries (Morocco, Algeria, Tunisia, Libya, Egypt, Jordan, Syria, Lebanon and Turkey) that helps them increase market access and develop trade policies which will facilitate the most efficient economic development. The study uses, the MacMap-HS6 database on market access and the Modeling International Relations under Applied General Equilibrium (MIRAGE) model of the global economy. While most South Mediterranean (SM) countries are very protectionist, they enjoy a fairly good access to world markets, either due to product specialization or to preferences granted by the European Union in the industrial sector. Today, these countries are simultaneously opting for multilateralism, North-South regionalism, and South-south regionalism. Are these options substitutes of each other? As this study suggests, that is not the case. A South-South integration of these countries is not enough trade – creating, while a North – South Free Trade Agreement with Europe is significantly trade – diverting, particularly in the case of SM countries’ agricultural imports. In order to examine the dynamics between multilateralism and regional strategies, the ‘structural congruence’ of these different trade regimes is measured and a new indicator is proposed.

     A multi-level analysis of public spending, growth and poverty reduction in Egypt

Fan, Shenggen; Al-Riffai, Perrihan; El-Said, Moataz; Yu, Bingxin; Kamaly, Ahmed 2006
Egypt is a lower middle-income country with a per capita gross domestic product (GDP) in 2003 of US$3,949 measured in international dollars, or purchasing power parity (World Bank 2005a). In the decade from 1975 to 1985, Egypt enjoyed rapid economic growth... however... Egypt still lags behind many middle-income countries in key social indicators. Further reforms are necessary to reduce poverty, especially if Egypt is to achieve the United Nations’ Millennium Development Goal (MDG) of halving the number of poor between 1990 and 2015. Government expenditures are an important means of promoting economic growth, reducing poverty, and improving income distribution... The overarching objective of this report is to use a multi-level analysis approach to assess both the effects of various government expenditures on growth and poverty reduction and the trade-offs between these two goals in order to determine policy options toward the achievement of the MDGs. The study involves analyses and simulations at household, sectoral, and regional levels, and at macro-levels using alternative analytical tools. While the analyses at each level were carried out independently, the report provides a synergy of the findings... The report concludes with a synthesis of the different levels of analysis.

     Food security, poverty, and economic policy in the Middle East and North Africa

Lofgren, Hans; Richards, Alan 2003
In MENA, household food insecurity, which is closely related to poverty and undernourishment, is most severe in rural areas and concentrated within Iraq, Sudan, and Yemen. 25% of the MENA population may be poor and 7% undernourished. The key to increased national and household-level food security is pro-poor growth, driven by export-oriented, labor-intensive sectors. Agricultural sector policies should be subordinate to the pro-poor growth goal and not to the goal of food self-sufficiency. Such a strategy requires conflict resolution; macroeconomic stability; physical and human capital accumulation; reliance on markets and the private sector, and diffusion of ecologically friendly farming practices.

     Demand for rainfall-index based insurance

McCarthy, Nancy 2003
In this paper, we derive estimates for willingness to pay for rainfall-index based insurance contracts. Surveys were undertaken in four regions in Morocco, representing different mean and variability of rainfall conditions. Results indicate that respondents in the high variability regions preferred contracts that paid out more often (had higher rainfall trigger levels), and which were more costly. In fact, a strong majority of respondents indicated they would purchase these contracts at the fair-value price; the estimated median willingness to pay for such contracts was between 12-20 percent above the fair value contract. However, in the lower rainfall variability regions, the cheaper contracts with lower trigger values were the only contracts for which the estimated median willingness to pay was greater than the fair-value of the contract. Finally, estimated coefficients for explanatory variables such as human and physical assets, debt levels, etc. did not have consistent impacts, either across or within regions.

     Dietary diversity as a food security indicator

Hoddinott, John F.; Yohannes, Yisehac 2002
Household food security is an important measure of well-being. Although it may not encapsulate all dimensions of poverty, the inability of households to obtain access to enough food for an active, healthy life is surely an important component of their poverty. Accordingly, devising an appropriate measure of food security outcomes is useful in order to identify the food insecure, assess the severity of their food shortfall, characterize the nature of their insecurity (for example, seasonal versus chronic), predict who is most at risk of future hunger, monitor changes in circumstances, and assess the impact of interventions. However, obtaining detailed data on food security status—such as 24- hour recall data on caloric intakes—can be time consuming and expensive and require a high level of technical skill both in data collection and analysis. This paper examines whether an alternative indicator, dietary diversity, defined as the number of unique foods consumed over a given period of time, provides information on household food security. It draws on data from 10 countries (India, the Philippines, Mozambique, Mexico, Bangladesh, Egypt, Mali, Malawi, Ghana, and Kenya) that encompass both poor and middle-income countries, rural and urban sectors, data collected in different seasons, and data on calories acquisition obtained using two different methods. ....[D]ietary diversity would appear to show promise as a means of measuring food security and monitoring changes and impact, particularly when resources available for such measurement are scarce.

     International conference on policy and institutional options for the management of rangelands in dry areas

Ngaido, Tidiane; McCarthy, Nancy; Di Gregorio, Monica 2002
The System-wide Program for Collective Action and Property Rights (CAPRi) sponsored an International Conference on Policy and Institutional Options for the Management of Rangelands in Dry Areas, May 7-11, 2001 in Hammamet, Tunisia. The conference focused on institutional aspects of rangeland management and brought together policy makers and researchers from North Africa, Sub-Saharan Africa and West Asia to discuss sustainable rangeland production strategies and livelihood of pastoral communities in dry areas. This conference summary paper contains summaries of the CAPRi sponsored research findings on institutional options for rangeland, policy makers’ interventions and reactions as well as the synthesis of discussion groups. These working groups evaluated outcomes of policies and institutions guiding rangeland management in terms of their impact on livelihoods and environmental sustainability, and explored alternative policies and institutional strategies in light of their capacity to reduce poverty and enhance food security." -- Author's Abstract

     Weighing what's practical

Ahmed, Akhter U.; Bouis, Howarth E. 2002
Despite achieving a significant cost reduction over the past two decades, the absolute cost of food subsidies in Egypt is still high relative to the benefits received by the poor. There is scope for better targeting food subsidies, in particular those for rationed cooking oil and sugar, both because reforms in this area are perceived to be far less politically sensitive than adjusting subsidy policies for bread and wheat flour and because higher income groups presently receive a significant percentage of the benefits. Targeting the high-subsidy green ration cards to the poor and the low-subsidy red ration cards to the nonpoor will require identification of both poor and nonpoor households. An International Food Policy Research Institute (IFPRI) research team in Egypt, in collaboration with the Egyptian Ministry of Trade and Supply, developed a proxy means test for targeting ration cards. This paper describes the process of moving from the optimal income-predicting model to the final model that was both administratively and politically feasible. An ex-ante evaluation of the levels of accuracy of the proxy means testing model indicates that the model performs quite well in predicting the needy and nonneedy households. An effective and full implementation of this targeting method would increase the equity in the ration card food subsidy system and, at the same time, lower the total budgetary costs of rationed food subsidies. Moreover, the experience gained under this reform would facilitate targeting future social interventions to reduce and prevent poverty in Egypt.

     Economy-wide benefits from establishing water user-right markets in a spatially heterogeneous agricultural economy

Diao, Xinshen; Roe, Terry L.; Doukkali, Rachid 2002
This paper analyzes the economy-wide gains obtainable from the allocation of surface irrigation water to its most productive use, and evaluates a decentralized mechanism for achieving this result in a spatially heterogeneous environment. The focus country for the analysis is Morocco. The analysis is based on a general equilibrium model that, in addition to the rest of the economy, captures 82 agricultural production activities, 66 of which are in seven separately identified water districts that span the entire country. The results suggest that a decentralized water trading mechanism could increase agricultural output by 8.3 percent, affect the rental rates of other agricultural inputs at the national level, including labor, and have economy-wide effects that entail modest declines in the cost of living, an increase in aggregate consumption, and expansion of international trade.

     Avoiding chronic and transitory poverty

Haddad, Lawrence James; Ahmed, Akhter U. 2002
This paper uses a panel data of 347 households in Egypt to measure changes in household consumption between 1997 and 1999 and to identify causes behind the changes. Per capita consumption decreased for the households during this time and, while not dramatic, it occurred at all points along the distribution. Over the two-year period, the number of households that fell into poverty was over twice as large as the number of households that climbed out of poverty. About two-thirds of overall poverty was chronic (average consumption over time was below the poverty line), and almost half of all poor were always poor. We use quantile regression methods to identify the factors that explain total, chronic, and transitory poverty. While our analysis ably documents the extent of transitory poverty, it does not explain well the determinants of this type of poverty. The predominantly chronic nature of poverty in the sample, and our ability to identify associated characteristics, strengthens the case for targeting antipoverty interventions such as food subsidies.

     Less poverty in Egypt?

Lofgren, Hans 2001
In this paper, the impact of alternative development strategies on growth and poverty is assessed in an economywide framework, using Egypt as a case study. The analysis is guided by the following question: By pursuing a development strategy different from the one actually pursued since the late 1970s, could Egypt’s government significantly have improved the status of its poor? To address this question, a dynamic, recursive, Computable General Equilibrium (CGE) model is used to simulate Egypt’s economy for the period 1979-1997. The model is built around a Social Accounting Matrix (SAM) for 1979. The results indicate that pro-poor redistribution of land and human capital assets could have been a particularly effective tool had Egypt prioritized more strongly to improve the welfare of the poor and reduce inequalities. Such policies could have been implemented without any noticeable negative impact on growth or aggregate welfare. The results also suggest that, for Egypt, there was no contradiction between more rapid growth, largely a function of more rapid productivity growth, and improved welfare for the poor. The present analysis confirms the finding of earlier analyses that, compared to pro-manufacturing policies, pro-agricultural policies have a more positive impact on household welfare in general and the poor in particular. There is a significant synergy between a pro-agricultural shift in productivity growth, improved market access for agricultural exports, and reduced transactions costs in foreign trade.

     Tribes, state, and technology adoption in arid land management, Syria

Rae, Jonathan; Arab, Georges; Nordblom, Thomas; Jani, K.; Gintzburger, Gustave 2001
Arid shrub-lands in Syria and elsewhere in West Asia and North Africa are widely thought degraded. Characteristic of these areas is a preponderance of unpalatable shrubs or a lack of overall ground cover with a rise in the associated risks of soil erosion. Migrating pastoralists have been the scapegoats for this condition of the range. State steppe interventions of the last forty years have reflected this with programs to supplant customary systems with structures and institutions promoting western grazing systems and technologies. Principal amongst the latter has been shrub technology, particularly Atriplex species, for use in land rehabilitation and as a fodder reserve. This paper deconstructs state steppe policy in Syria by examining the overlap and interface of government and customary legal systems as a factor in the history of shrub technology transfer in the Syrian steppe. It is argued that the link made between signs of degradation and perceived moribund customary systems is not at all causal. Indeed, customary systems are found to be adaptive and resilient, and a strong influence on steppe management and the fate of technology transfer initiatives. Furthermore, developments in rangeland ecology raise questions about claims for grazing-induced degradation and call for a reinterpretation of recent shifts in vegetation on the Syrian steppe. Given the ineffectiveness of past state interventions, and in view of renewed understanding of customary systems and rangeland ecology, decentralization and some devolution of formal management responsibility is likely to be a viable and an attractive option for policymakers.

     Managing droughts in the low-rainfall areas of the Middle East and North Africa

Hazell, P. B. R.; Oram, Peter; Chaherli, Nabil 2001
Drought is a recurrent and often devastating threat to the welfare of countries in the Middle East and North Africa (MENA) where three-quarters of the arable land has less than 400 mm of annual rainfall, and the natural grazings, which support a majority of the 290 million ruminant livestock, have less than 200 mm. Its impact has been exacerbated in the last half century by the human population increasing yearly at over 3%, while livestock numbers have risen by 50% over the quinquennium. Virtually no scope exists for further expansion of rainfed farming and very little for irrigation, hence there is competition between mechanized cereal production and grazing in the low rainfall areas, and traditional nomadic systems of drought management through mobility are becoming difficult to maintain. Moreover droughts seem to be increasing in frequency, and their high social, economic, and environmental costs have led governments to intervene with various forms of assistance to farmers and herders, including distribution of subsidized animal feed, rescheduling of loans, investments in water development, and in animal health. In this paper we examine the nature and significance of these measures, both with respect to their immediate benefits and costs to the recipients and to governments, and to their longer term impact on poverty and the environment. We conclude that while they have been valuable in reducing catastrophic losses of livestock and thus alleviating poverty, especially in the low rainfall areas where they are the predominant source of income, continued dependence on these programs has sent inappropriate signals to farmers and herders, leading to moral hazards, unsustainable farming practices, and environmental degradation, while generally benefiting the affluent recipients most.

     The impact of alternative development strategies on growth and distribution

El-Said, Moataz; Lofgren, Hans; Robinson, Sherman 2001
Addressing longer-term issues of economic development in Egypt, the paper employs a dynamically recursive computable general equilibrium (CGE) model to assess the outcomes associated with two types of development approaches over the period 1998-2012. One is a targeted sector development approach, and the second is a more broad-based development approach. The results indicate that, when agricultural exports remain relatively low, promoting the Egyptian textile sector is a win-win scenario in terms of rapid growth and equity. In addition, adopting policies that maintain agricultural prices leads to rapid growth and a general improvement of the distribution of income among households. A crucial policy objectives for achieving rapid and egalitarian growth for the Egyptian economy is the ability to secure improved access to international textile markets and the successful expansion of agricultural exports.

     Impact of land tenure and other socioeconomic factors on mountain terrace maintenance in Yemen

Aw-Hassan, Aden; Alsanabani, Mohammed; Bamatraf, Abdul Rahman 2000
This paper describes the land property rights and tenure systems in the western escarpments of the Yemeni Highlands, and analyses the impact of land tenure arrangements and other socioeconomic factors on terrace maintenance. Owner-cultivated land is dominant in the terraced area, but more than one-third of the land is sharecropped. Terraces cultivated by landowners have a lower number of broken walls per hectare than those cultivated by tenants under sharecropping arrangements. This is more significant on sharecropped public (state and waqf) than private lands the reason being the lack of clearly defined responsibilities between tenants and landowners for maintenance and cost sharing. These responsibilities are defined in the customary rules of land use, but uneven power distribution, which favors landlords, results in lack of clear rules and enforcement mechanisms. The study recommends government action in strengthening existing local institutions in documenting sharecropping contracts, improving and targeting agricultural credit services, instituting better price policies, and improving technologies for farmers. These measures will likely increase land users’ expected returns to investment, particularly for food crops, and increase landowners’ willingness to invest in terrace maintenance.

     The determinants of employment status in Egypt

Assaad, Ragui; El-Hamidi, Fatma; Ahmed, Akhter U. 2000
Egyptian labor market is moving from a period of high overall unemployment to one where unemployment is increasingly concentrated among specific groups whose access to the private-sector labor market is limited. Educated young women are more adversely affected than their male counterparts by the transition to a private-sector-led economy. There is no systematic link between youth unemployment among new entrants and poverty unless it is the head of the household who is unemployed. An economic policy environment that is favorable for labor-intensive, export-oriented industries would help absorb the new entrants into the labor market, and the prospect is particularly good for young female workers. Policymakers should consider a reduction in the female-specific employer mandates (such as the existing provision for a generous maternity leave) that raise the cost of hiring women.

     Determinants of poverty in Egypt, 1997

Datt, Gaurav; Jolliffe, Dean 1999
Poverty profiles are a useful way of summarizing information on the levels of poverty and the characteristics of the poor in a society. For Egypt, while there has been some work on a descriptive analysis of the characteristics of the poor, to our knowledge, there is no precursor to an empirical modeling of the determinants of poverty using nationally representative data. In this paper, we have sought to extend the descriptive analysis of the Egypt poverty profile presented in Datt, Jolliffe, and Sharma (1998) by modeling the determinants of poverty, using data from the 1997 Egypt Integrated Household Survey. A key conclusion of our study has to do with the important instrumental role of education in alleviating poverty in Egypt. Increasing average years of schooling, as well as improving the level of parents education, is indicated to have large impacts on average living standards and poverty levels.

     The political economy of food subsidy reform in Egypt

Gutner, Tamar 1999
Egypt has a large food subsidy program that has created a relatively effective social safety net, but it has also drained budgetary resources and proved to be poorly targeted toward the poor. Discussions about reforming the system to improve its effectiveness have run into extreme political sensitivities surrounding the issue of food subsidies. Egypt, therefore, well illustrates the quandaries that policymakers and others contemplating food subsidy reform face in developing countries. This study examines the political economy of food subsidy reform in Egypt and discusses the economic and political advantages and disadvantages of nine possible reforms. The study concludes that the reforms that have the greatest chance of success are those that reduce the access of the wealthy while increasing the access of the truly needy, but the timing, sequence, and trade-offs of such reforms have to be taken into account before they are implemented.

     Adjustment of wheat production to market reform in Egypt

Kherallah, Mylene; Minot, Nicholas; Gruhn, Peter 1999
In response to slow growth in the agricultural sector and as part of a general shift towards a more market-oriented economy, the Government of Egypt started liberalizing the agricultural sector in 1987. Controls over wheat production and marketing were eliminated and wheat producer prices were brought closer to international levels. As a result, there has been remarkable increases in wheat crop area and yields, causing wheat production to triple from 1986 to 1998. This study analyzes the results of a survey of 800 Egyptian wheat farmers in order to address three issues that are of interest to agricultural reform policy in Egypt. First, what are the patterns in wheat production and marketing that have emerged following the economic reforms? Second, why is the government unable to purchase more than a small portion of national wheat production? Third, how does wheat supply and input demand respond to wheat and input prices? The survey indicates that Egyptian wheat production is based on small-scale farms, yet these farms are highly commercialized and the use of inputs such as labor, fertilizer and irrigation, is intensive. The government has problems reaching its wheat procurement target because most of the wheat produced is consumed in the rural areas and farmers prefer to sell to traders because of better prices and location. Econometric analysis of the survey data suggests that wheat farmers respond significantly to crop and input prices. The estimated own-price supply elasticity is 0.3, implying that the use of price policy alone to pursue wheat self-sufficiency would be costly and ill-advised.

     A general equilibrium analysis of alternative scenarios for food subsidy reform in Egypt

Lofgren, Hans; El-Said, Moataz 1999
This paper uses a Computable General Equilibrium (CGE) model to simulate the short-run effects of alternative food- subsidy scenarios. Savings from reduced subsidy spending are used to reduce direct taxes uniformly for all household types. The model uses a 1996/97 database with detailed household information. The simulated impact of targeting or eliminating oil and sugar subsidies is small: disaggregated real household consumption changes by ±0.3 percent. It is progressive if the subsidy is targeted to the needy (the bottom two quintiles in rural and urban areas) and regressive if it is eliminated. The targeting of all food subsidies is pro-needy, in part due to important indirect effects. It raises the consumption of the needy by 0.5 percent with, on average, little change for the nonneedy. The strongest gains are recorded for the rural needy (consumption increase by 1.0 percent). Food subsidy elimination is regressive: the needy suffer a consumption loss of 1.1 percent. If the government savings instead are transferred to the needy, the impact is reversed: consumption increases by 4.2 percent for needy households while the nonneedy register a small loss. The overall policy implication of the paper is that there is scope for reducing food subsidy spending without hurting the low-income groups.

     International conference on agricultural growth, sustainable resource management, and poverty alleviation in the low rainfall areas of West Asia and North Africa

Oram, Peter; Hazell, P. B. R.; Nordblom, Thomas; Chaherli, Nabil; Ngaido, Tidiane 1998
An international conference was held in Amman, Jordan in September 1997 to examine mounting problems of poverty and environmental degradation in the low rainfall areas (LRAs) of the eight Mashreq and Maghreb countries of West Asia and North Africa (Iraq, Jordan, Lebanon and Syria from the Mashreq region, and Algeria, Libya, Morocco and Tunisia from the Maghreb), and to seek solutions which reconcile economic growth with equity and environmental conservation -- the 3 E's of sustainable development. The conference was also presented with the findings of a three-year collaborative research project dealing with these issues and including scientists from the eight Mashreq and Maghreb (M&M) countries and two international agricultural research centers.

     A profile of poverty in Egypt

Datt, Gaurav; Jolliffe, Dean; Sharma, Manohar 1998
This paper presents a profile of poverty in Egypt for 1997. It assesses the magnitude of poverty and its distribution across geographic and socioeconomic groups, provides information on the characteristics of the poor, illustrates the heterogeneity among the poor, and helps identify empirical correlates of poverty. The poverty profile is constructed using data from the recently completed Egypt Integrated Household Survey, a nationwide, multiple-topic household survey, carried out by the International Food Policy Research Institute in coordination with the Ministry of Agriculture and Land Reclamation and the Ministry of Trade and Supply. Reference poverty lines that take into account regional differences in food and nonfood prices, age and composition of poor households, and food and nonfood consumption preferences are used to determine incidence, depth, and severity of poverty. The characteristics of the poor are analyzed. These characteristics include household composition, dwelling type, educational attainment and access, labor force participation and distribution, child immunization levels, payment transfers, agricultural landholdings, and access to community facilities.

     Agricultural wages and food prices in Egypt

Datt, Gaurav; Olmsted, Jennifer 1998
The trend in real agricultural wages in Egypt is described well by an inverted U-shaped curve with a peak around 1985. But the rise and fall of real wages masks a complex dynamic process by which nominal wages adjust in response to changes in food prices. We use governorate-level panel data for 1976–1993 to explore the nature of this adjustment process. Our results indicate that nominal wages adjust slowly. There is a significant negative initial impact of rising food prices on real wages, though wages do catch up in the long run.

     The mixed-complementary approach to specifying agricultural supply in computable general equilibrium models

Lofgren, Hans; Robinson, Sherman 1997
In Computable General Equilibrium (CGE) models, it is typically assumed that agricultural resources are smoothly substitutable in neoclassical functions, with flexible prices generating market equilibrium in a setting with full resource employment. Such a specification is often inadequate, especially for analyses of agricultural supply issues. With more disaggregation, the use of smooth, twice-differentiable, production or cost functions to specify agricultural technology is increasingly unrealistic. The purpose of this paper is to show how CGE models formulated as mixed-complementarity (MC) problems can incorporate more realistic, specifications of agricultural supply, drawing on the extensive literature on mathematical programming models applied to agriculture. We extend a stylized standard neoclassical CGE model to a CGE-MC model that includes Leontief (activity-analysis) technology, endogenous determination of the market regime for agricultural factors (unemployment or full employment), and inequality constraints on agricultural factor use. In an analysis of reduced agricultural water supplies in Egypt, we show how such a model can generate realistic results concerning water use and productivity that cannot be captured in a standard CGE model. The main conclusion is that, in analyses focused on agricultural supply issues, CGE-MC models that selectively incorporate features from the mathematical-programming literature offer a powerful alternative to standard models.

     Tiger or turtle?

Lofgren, Hans; Robinson, Sherman; Nygaard, David F. 1996
A dynamic computable general equilibrium (CGE) model is used to explore alternative scenarios for 1990-2020 in areas critical for Egypt's economy -- productivity growth, investment, foreign trade, and water. The model is formulated as a mixed-complementarity problem, has a detailed treatment of agriculture, assumes competitive markets and determines efficient water allocation. A Turtle scenario extrapolates Egypt's recent poor productivity and low investment, while a "Tiger" scenario assumes East Asian performance. For the Turtle scenario, incomes are stagnant and a crisis emerges in the labor market. With rapid growth in export demand, investment and productivity, the "Tiger" scenario generates almost tripled per-capita incomes and full employment. Sensitivity analysis for the Tiger scenario suggests that growth in export demand is important, while tariff removal with no other policy changes has little effect. Increasing water scarcity hurts agriculture and labor absorption, but has little effect on overall growth."

     Cost of managing with less

Lofgren, Hans 1996
Using a mathematical-programming agricultural-sector model of Egypt, this paper analyzes mechanisms for allocating scarce water and for charging the farmers the Operation and Management (O&M) costs of irrigation and drainage, currently covered by the government. The effects of cost recovery are negative but minor. A crop charge (based on crop water consumption per land unit) and a volumetric charge both discourage consumption. The former is easier to implement but does not stimulate water-saving technical change. A 15% cut in agricultural water supplies (permitting a 79% increase in non-agricultural use) raise farmer incomes and has moderate negative effects on consumer welfare and production; a 30% cut causes disproportionately larger negative effects, including large increases in the agricultural trade deficit. Efficient market-based allocations yield higher production and avoid unequal water access, associated with the inefficient alternative of forcing half the farmers to cut their use. However, water sales to farmers at prices reducing demand by 15-30% lead to 20-35% declines in farmer incomes. This suggests the need to explore reforms endowing the farmers with tradable water rights.

     Middle East water conflicts and directions for conflict resolution

Wolf, Aaron T. 1996
In looking toward 2020, one of the most severe problems to be faced is an impending shortage of adequate supplies of fresh water essential for drinking and for growing crops. The Middle East, where a few waterways serve large areas of land belonging to a number of nations, is the place where strife over water is most likely to erupt. This paper examines the past--how water in the Middle East came to be divided as it is today--and looks at possible solutions for alleviating a water crisis and the resulting political tensions.

     Price competitiveness and variability in Egyptian cotton

Bautista, Romeo M.; Gehlhar, Clemen G. 1995
This paper examines the role of price incentives in the observed decline in cotton production during the 1980s and in the apparent improvement in recent years. The following determinants (in an accounting sense) of the changes in the relative producer price of cotton during 1980-92 are quantified: (1) changes in the foreign price; (2) changes in the real exchange rate; and (3) changes in nominal protection and the marketing margin. An estimated model of the real exchange rate for Egypt is used to provide a further decomposition of the changes in the relative cotton price that isolates the effect of policy-related factors. The comparative effects of sectoral and economywide policies are analyzed based on three alternative policy regimes in terms of the average price and variability of annual price levels over the period 1971-1992. Government interventions are found to reduce both the long-run price incentive and short-run price variability in Egyptian cotton. Various approaches in dealing with commodity pice instability in the context of a more open trade regime are indicated.

     Macro and micro effects of subsidy cuts

Lofgren, Hans 1995
Using a Computable General Equilibrium model for Egypt based on data for 1991/92, this paper analyzes the short-run impact of removing price-distorting subsidies for oil products sold domestically and for commodities covered by the consumer subsidy program. The model merges neoclassical and structuralist features. Two sets of simulations are conducted. The first involves raising the price of domestic oil products to international levels; the second simulates the impact of removing consumer subsidies. Each policy gives rise to an increase in government savings. The analysis is focused on imposing alternative macro closures in order to explore trade-offs between alternative uses for these savings: foreign debt repayment (adding to Egypt's net foreign assets), domestic investment, and government transfers to the households. The results indicate that both policies are contractionary, across all macro closures. The strongest fall in real GDP and other indicators resulted from paying back foreign debt. For the other two cases, the savings were used in a manner which simulated the domestic economy, with a trade-off between investing and improving current household conditions. On the micro level, the oil policy simulations showed a decline in domestic oil use by 6-8 percent (with an accompanying reduction in air pollution) and larger exports. For the consumer subsidy cut, the household consumption fall was relatively limited for food due to low income and price elasticities; most of the consumption cut affected other industrial goods and services. Sensitivity analysis suggested that one structuralist feature--mark-up pricing and excess capacity in much of the economy--had a strong impact on the results; when profit maximization and no excess capacity was assumed for most sectors, the changes in real GDP and other variables were much smaller.

     Land, water, and agriculture in Egypt

Robinson, Sherman; Gehlhar, Clemen G. 1995
The tax and subsidy system in Egypt in 1986-88 was very distorted, involving large, sectorally variegated, ouput taxes and subsidies. In agriculture, there were also major input subsidies and no charges for water. In this paper, an 11-sector, computable general equilibrium (CGE) model is used to capture this mix of policies, focusing on land and water use in agriculture and on the links between agriculture and the rest of the economy.

     Impact of the structural adjustment program on agricultural production and resource use in Egypt

Hazell, P. B. R.; Soliman, Ibrahim; Siam, Gamal; Perez, Nicostrato D. 1995
This paper uses an agricultural sector model to evaluate the effects of an ambitious and ongoing policy reform program on agricultural production and resource use in Egypt. The results show that Egypt has already gained from the policy reforms, but that much larger gains depend on increased exports of high value crops. Water is found to be emerging as an important constraint on agriculture, and it will be essential to establish more effective institutional and pricing mechanisms to encourage greater water use efficiency in the future. Because many of the new lands compete with the more productive lands of the Nile delta for water, the economic return to the development of new lands is also found to be low. The policy reforms are not likely to lead to substantial increases in agricultural employment, even if exports of high value crops could be increased. However, the model results also show that more employment intensive strategies could be designed that would involve little sacrifice in economic efficiency.

     Foodgrain market integration under market reforms in Egypt

Goletti, Francesco; Badiane, Ousmane; Sil, Jayashree 1994
Using urban price data for the period 1976 to 1992 and rural price data for the period 1982 to 1992, the study assesses the degree of market integration for wheat, maize and rice. The study finds that i) reforms have not destabilized foodgrain prices; ii) there is some indication that the degree of segmentation among food grain markets has decreased during the reform period, especially for rural wheat and maize markets; iii) urban markets exhibit a much higher degree of market segmentation, particularly for wheat; and iv) the extent of market integration in terms of the magnitude of market interdependence and speed of price transmission was until 1992 very limited. Urban markets seemed to have a lower magnitude of integration than those of rural areas and the speed of adjustment was higher among these markets, reflecting the better communication and infrastructure network in urban areas.

     Agricultural market reforms in Egypt: initial adjustments in local output markets

Badiane, Ousmane 1994
This study represents one of the first attempts to examine the process of adjustment within the farming and marketing sectors to the reform of agricultural markets in Egypt. Even though it is primarily based on rice sector data, it gives the following interesting insights into the initial responses to the reform process. First, farmers are reacting with higher output levels and marketed surplus, although the bulk of the expansion has taken place among farms larger than 5 feddans. Marketed surplus among smaller sized farms has hardly changed. Second, the reforms have brought about increased private sector participation in the distribution of foodgrains. However, the level of participation is significant only in terms of local trading. Third, private sector participation in the processing industry has increased in terms of milling capacity, due primarily to the large increase in the number of larger private sector mills. In terms of milled quantities, however, public millers still process the bulk of the output, and have even raised their milling share, while small private mills are losing market shares. Furthermore, millers continue to procure paddy rice and traders continue to process paddy rice, so that it would appear that specialization has not yet occurred in the two subsectors. Finally, concomitant to changes in output levels and marketing behavior are falling real farm foodgrain prices, except for wheat. At the same time, real farm wages and real fertilizer prices have also declined, offsetting some of the effect of falling output prices. Combined with the strong increase in output levels, this would suggest that farmers may be already gaining from the reforms, to the extent that changes in the other cost elements (land and equipment) do not exceed these gains.

     Agricultural market reforms in Egypt: initial adjustments in local input markets

Goletti, Francesco 1994
The high use of modern inputs in Egypt's agricultural system well before the reforms has been very favorable to the development of private markets, particularly in the fertilizer sector. The level of adoption being very high, the usual demand constraints did not operate and traders' entry was facilitated by the size of the market....In the fertilizer sector, the reduction in subsidies has been initially accompanied by a reduction in use, but by 1993 fertilizer use has returned to its 1991 levels...The effect on crop production has been positive in most cases, with increases in production and yields. Higher nominal prices of fertilizers and pesticides did not translate into higher real prices. There is some evidence that the ratio between foodgrain prices and the prices of fertilizers, pesticides, and labor have gone up, pointing indirectly to some evidence concerning improvement in average farmer's income, to the extent that changes in the cost of other inputs like land and equipment do not exceed these gains.

     The Egyptian rice market

Elminiawy, Ahmed Mahmoud 1989

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