The Effect of Trade Liberalization on the Sustainability of Agricultural Sectors in Egypt and Tunisia: A New Framework Based on TFP Growth Structure
The Growth of agricultural Total Factor Productivity (TFP) is considered fundamental to ensure food security and to enhance farmers livelihoods in the Middle East and North African (MENA) region. The role of TFP growth in accelerating and sustaining the pace of agricultural growth has gain great interest and is well recognized in the specialized literature. However, agricultural sectors in MENA countries are nowadays facing a lot of challenges. Low levels of agricultural development, continuous population growth, diminishing supply of per capita natural resources (arable land and water), limited options for further expansion of cultivated land and slowing returns to inputs intensification, are some examples of these extreme challenges. The problem of achieving food security and improving farmers income become magnified when we consider the current environmental and natural resources shortage. Agricultural productivity trends and the sustainability of agricultural growth in MENA countries are necessary to consider when measuring the past and current agricultural performances and analyzing agricultural trade policies. However, only few studies examine the sustainability of the TFP growth in the region from a historical perspective. Likewise, studies about the effects of trade openness and investment policies used in the past to promote agricultural TFP growth are also rarely examined in MENA countries. In order to further contribute to the existing literature, we selected two MENA countries (Tunisia and Egypt) in order to investigate the effect of their agricultural trade openness on their respective agricultural productivity growth. In a first step, we estimated and decomposed the agricultural TFP in both countries (using Tornqvist-Theil Indexes ) for the period from 1962 to 2012. In a second step the objective was to assess the effect of trade (and other) policies on the TFP growth. To achieve the growth of TFP, some agricultural policies related trade liberalization and domestic inputs use have been carried out, which are proved to be efficient by the reality. However, if we consider the sustainability of TFP growth in a long-term perspective, we should not jump to conclusions about whether the two policies would work positively or not. Thus, in this paper, a specific attention was paid to the impact of trade openness and domestic inputs on the sustainability of TFP growth, which can be measured by the growth structure. The article targets policy makers and researchers. Keywords: Agricultural TFP growth structure; Trade policy; Sustainability; Tornqvist-Theil Index; MENA.