The Poverty Impacts of the Doha Round in Cameroon : The Role of Tax Policy

The authors aim to assess the possible impacts of the Doha Round of negotiations on poverty in Cameroon. During the recent period of economic recovery, Cameroon enjoyed a sharp decline in poverty, with the headcount index falling from 53.3 percent of inhabitants in 1996 to 40.2 percent in 2001, mostly due to economic growth rather than redistribution. Will the current trade negotiations under the Doha Round reinforce or curb this trend? They apply a computable general equilibrium (CGE) microsimulation model that involves 10,992 households in order to address this question. The authors find the Doha Round to be poverty-reducing for Cameroon. For the whole country, the estimate of the net number of people who are lifted out of poverty is 22,000 following this scenario. Further investigations indicate that more ambitious world trade liberalization leads to greater poverty alleviation at the national level, while Cameroon's domestic trade liberalization has adverse poverty and inequality impacts-despite giving rise to higher aggregate welfare. Under the Doha scenario, the cuts in Cameroon's tariffs are very small (the average tariff rate moves from 11.79 percent in the base run to merely 11.66 percent) so that world trade liberalization effects on prices more than offset the adverse own liberalization effects in this scenario. If the rest of the world and Cameroon full trade liberalizations are combined, the adverse impacts of own liberalization outweigh the favorable outcomes of the world trade liberalization. The results suggest furthermore that the choice of tax replacement instrument can have an important bias in poverty impacts: poverty gets worse in the country case study when using an imperfect value-added tax instead of a neutral replacement tax to compensate lost tariff revenue, and gets even worse when using a consumption tax. Key reasons here are the supplementary distortions which are nil in case of a neutral tax and greatest in the case of a consumption tax. In addition, accompanying measures should be considered to avoid poverty increases in the framework of Economic Partnership Agreements currently in negotiation between African, Caribbean, and Pacific (ACP) countries and the European Union, which propose a drastic dismantlement of ACP tariffs over the next few years.

Bibliographic Details

Main Authors:	Emini, Christian Arnault, Cockburn, John, Decaluwe, Bernard
Language:	English
Published:	World Bank, Washington, DC 2005-10
Subjects:	ADVERSE IMPACTS, AGGREGATE CONSUMPTION, AGGREGATE IMPORTS, AGGREGATE LEVEL, AGRICULTURAL PRODUCTS, AGRICULTURAL SECTOR, AGRICULTURAL WAGE, AGRICULTURAL WAGES, AGRICULTURAL WORKERS, AGRICULTURE, AVERAGE GROWTH, AVERAGE GROWTH RATE, AVERAGE TARIFF, CAPITAL INCREASE, CASE STUDY, CASH CROPS, COMPETITIVENESS, CONSTANT ELASTICITY OF SUBSTITUTION, CONSUMER PRICE INDEX, CONSUMER PRICES, CURRENCY, DEVALUATION, DEVELOPING COUNTRIES, DOMESTIC DEMAND, DOMESTIC MARKET, DOMESTIC PRODUCTION, ECONOMIC CRISIS, ECONOMIC GROWTH, ECONOMIC PERSPECTIVES, ECONOMIC POLICIES, ELASTICITY, ELASTICITY OF SUBSTITUTION, ESCAPE POVERTY, EXPORT DIVERSIFICATION, EXPORT MARKETS, EXPORT PERFORMANCE, EXPORT PRICE, EXPORT PRICES, EXPORT SHARES, EXPORTS, EXTERNAL TRADE, EXTREME POVERTY, FACTOR ENDOWMENTS, FACTOR MARKETS, FACTOR PRICES, FEMALE-HEADED HOUSEHOLDS, FOOD INDUSTRY, FOOD PROCESSING, FREE TRADE, FULL LIBERALIZATION, GDP, GINI INDEX, GROWTH RATE, HEADCOUNT INDEX, HOUSEHOLD CONSUMPTION, HOUSEHOLD EXPENDITURES, HOUSEHOLD INCOME, HOUSEHOLD SURVEY, HOUSEHOLD SURVEYS, HOUSEHOLD WELFARE, HUMAN DEVELOPMENT, IMPORT COMPETITION, IMPORT PENETRATION, IMPORT PRICES, IMPORT TARIFFS, INCOME, INCOME DISTRIBUTION, INCOME GAINS, INCOME SHARES, INDUSTRIAL PRODUCTS, INDUSTRIAL SECTOR, INEQUALITY, INFORMAL ACTIVITIES, INFORMAL SECTOR, INSTITUTIONAL ENVIRONMENT, INTERNATIONAL MARKET, INTERNATIONAL TRADE, LABOR MARKET, LABOR MARKETS, LOST TARIFF REVENUE, NATIONAL LEVEL, OIL PRICES, PER CAPITA INCOME, POLICY RESEARCH, POOR, POOR BENEFIT, POOR HOUSEHOLD, POOR HOUSEHOLDS, POOR INDIVIDUALS, POOR PEOPLE, POOR POPULATION, POVERTY, POVERTY ALLEVIATION, POVERTY GAP, POVERTY HEADCOUNT, POVERTY INCIDENCE, POVERTY INCREASES, POVERTY INDICATORS, POVERTY LINE, POVERTY MEASURES, POVERTY REDUCING, POVERTY SEVERITY, POVERTY SITUATION, POVERTY TRENDS, PRIMARY FACTORS, PRIMARY FACTORS OF PRODUCTION, PRODUCTION COSTS, PUBLIC SERVICE, PUBLIC SERVICES, REAL EXCHANGE RATE, REAL GDP, RURAL, RURAL AREAS, RURAL HOUSEHOLD, RURAL HOUSEHOLDS, RURAL INCOME, RURAL INCOMES, SEVERE POVERTY, SQUARED POVERTY GAP, TARIFF RATE, TARIFF RATES, TARIFF REVENUES, TAX REVENUES, TECHNICAL ASSISTANCE, TERMS OF TRADE, TOTAL OUTPUT, TRADE AGREEMENT, TRADE BALANCE, TRADE DEFICIT, TRADE LIBERALIZATION, TRADE LIBERALIZATIONS, TRADE NEGOTIATIONS, TRADE REFORM, UNILATERAL LIBERALIZATION, UNSKILLED LABOR, URBAN AREA, URBAN AREAS, URBAN HOUSEHOLDS, URBAN POOR, URBAN POVERTY, VALUE ADDED, VALUE OF EXPORTS, VALUE OF IMPORTS, WAGE INCOME, WAGE RATE, WAGE RATES, WORLD PRICES, WORLD TRADE, WTO,
Online Access:	http://documents.worldbank.org/curated/en/2005/10/6329506/poverty-impacts-doha-round-cameroon-role-tax-policy https://hdl.handle.net/10986/8516
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