Hérault, NicolasThurlow, James2017-09-072017-09-072009-06https://hdl.handle.net/10986/28151South Africa has rapidly reduced trade barriers since the end of Apartheid, yet agricultural production and exports have remained sluggish. Also, poverty and unemployment have risen and become increasingly concentrated in rural areas. This paper examines the extent to which remaining price distortions, both domestic and foreign, are contributing to the underperformance of the agricultural sector vis-a-vis the rest of the economy. The author draws on a computable general equilibrium (CGE) and micro-simulation model of South Africa that is linked to the results of a global trade model. This framework is used to examine the effects of eliminating global and domestic price distortions. Model results indicate that South Africa's agricultural sector currently benefits from global price distortions, and that removing these will create more jobs for lower-skilled workers, thereby reducing income inequality and poverty. The author also fined that South Africa's own policies are biased against agriculture and that removing domestic distortions will raise agricultural production. Job losses in nonagricultural sectors will be outweighed by job creation in agriculture, such that overall employment rises and poverty falls. Overall, the findings suggest that South Africa's own policies are more damaging to its welfare, poverty and inequality than distortionary policies in the rest of the world. Existing national price distortions may thus explain some of the poor performance of South Africa's agricultural sector and rural development.en-USCC BY 3.0 IGOAGRICULTURAL COMMODITIESAGRICULTURAL GROWTHAGRICULTURAL LANDAGRICULTURAL LIBERALIZATIONAGRICULTURAL OUTPUTAGRICULTURAL POLICIESAGRICULTURAL POLICYAGRICULTURAL PRICESAGRICULTURAL PRODUCTIONAGRICULTURAL PRODUCTSAGRICULTURAL SECTORAGRICULTURAL SUPPORTAGRICULTURAL WAGESAGRICULTURAL WORKERSAGRICULTUREANIMAL FEEDSAPARTHEIDBAKERY PRODUCTSBEEFBEVERAGESCAPITAL GOODSCAPITAL INCOMECAPITAL RETURNSCEREALSCOMMERCIAL AGRICULTURECOMMERCIAL FARMSCOMMODITYCOMMODITY MARKETSCOMMODITY PRICESCOMPETITIVENESSCONFECTIONERYCONSTANT RETURNS TO SCALECONSUMER PRICE INDEXCONSUMER SPENDINGCONSUMPTION EXPENDITURECOST OF INVESTMENTCURRENT ACCOUNTCURRENT ACCOUNT BALANCEDAIRYDECISION MAKINGDEMOGRAPHICDEPRECIATIONDEVELOPING COUNTRIESDISPOSABLE INCOMEDISPOSABLE INCOMESDIVIDENDSDOMESTIC DEMANDDOMESTIC GOODSDOMESTIC PRICEDOMESTIC PRICESDOWNWARD PRESSUREDRIED FRUITECONOMETRICSECONOMIC PERFORMANCEECONOMIC STRUCTUREELASTICITYELASTICITY OF SUBSTITUTIONEMPLOYMENT STATUSEXCHANGE RATEEXPORT COMPETITIVENESSEXPORT EARNINGSEXPORT GROWTHEXPORT PERFORMANCEEXPORT SECTOREXPORT SECTORSEXPORT SUBSIDIESEXPORTSFACTORS OF PRODUCTIONFARM PRODUCTSFISCAL DEFICITFLEXIBLE EXCHANGE RATEFOOD ITEMSFOOD POLICYFOOD POLICY RESEARCHFOOD PRICESFOOD PROCESSINGFOOD PRODUCTSFOREIGN CURRENCYFOREIGN EXCHANGEFOREIGN MARKETSFOREIGN TRADEFRUITFRUITSFULL LIBERALIZATIONGDPGENERAL EQUILIBRIUMGENERAL EQUILIBRIUM MODELGINI COEFFICIENTGLOBAL MARKETSGRAINSGROSS DOMESTIC PRODUCTHOUSEHOLD INCOMEHOUSEHOLD WELFAREIMPORTIMPORT DEMANDIMPORT PRICESIMPORT TARIFFIMPORT TARIFFSIMPORTSINCOMEINCOME DISTRIBUTIONINCOME ELASTICITIESINCOME INEQUALITYINCOME SHARESINCOME TAXINCOME TAXESINEQUALITYINTERNATIONAL FOOD POLICY RESEARCH INSTITUTEINTERNATIONAL TRADEINVESTMENT DEMANDINVESTMENT SPENDINGIRRIGATIONJOB CREATIONLABOR FORCELABOR MARKETLEGUMESLEVEL OF INVESTMENTLIBERALIZATIONSLIVESTOCK PRODUCTIONMACROECONOMIC SIMULATIONMACROECONOMIC STABILITYMAIZEMARKET PRICESMEATMEATSNATIONAL ECONOMYNATIONAL POVERTYNOMINAL WAGENOMINAL WAGESOILS & FATSPER CAPITA INCOMEPOLITICAL ECONOMYPOORPOOR HOUSEHOLDSPOVERTY ALLEVIATIONPOVERTY LINEPOVERTY LINESPOVERTY REDUCTIONPRICE DISTORTIONSPRICE OF EXPORTSPRIVATE CONSUMPTIONPRIVATE SAVINGSPROCESSED FOODSPRODUCT MARKETSPRODUCTION FUNCTIONSPROFIT MAXIMIZATIONREAL APPRECIATIONREAL EXCHANGE RATEREAL EXCHANGE RATE APPRECIATIONREAL EXPORTSREAL GDPREAL IMPORTSRELATIVE PRICESREMOTE REGIONSRESERVE BANKRURALRURAL AREASRURAL DEVELOPMENTRURAL HOUSEHOLDSRURAL INCOMESRURAL LIVELIHOODSRURAL POVERTYRURAL WORKERSSAVINGSSHEEP MEATSKILLED WORKERSSLOWDOWNSMALL COUNTRYSMALLHOLDER FARMERSSTRUCTURAL ADJUSTMENTSUGARSUGAR PRODUCTSSUGAR REFININGSUGARCANETAXTAX RATETAX RATESTAX STRUCTURETOTAL EXPORTTOTAL EXPORTSTOTAL IMPORTSTRADABLE GOODSTRADE AGREEMENTSTRADE BARRIERSTRADE DEFICITTRADE LIBERALIZATIONTRADE POLICIESTRADE POLICYTRADE REFORMSTRADE SHOCKUNEMPLOYMENTUNEMPLOYMENT RATEUTILITY FUNCTIONVEGETABLESWAGE DIFFERENTIALSWAGESWHEATWORLD DEMANDWORLD DEVELOPMENT INDICATORSWORLD PRICEWORLD PRICESWORLD TRADEWORLD TRADE ORGANIZATIONWorking PaperWorld Bank10.1596/28151