Impact of market reforms on the low rainfall areas in West Asia and North Africa

Abstract

This paper summarizes results obtained from research activities conducted in the Mashreq/Maghreb Project (M&M). The specific objective is to look at the impact of market liberalization in the context of structural adjustment at the sector and the community level, with particular emphasis on barley and sheep production in the low rainfall (or low potential) areas (LRAs) and the possible effect on incomes, resource management, and technology adoption. The paper provides a descriptive analysis of structural adjustment programs in the region and presents results from multi-market and community model simulations for selected WANA countries. A comparison is made between Tunisia and Jordan on the basis of price policy changes in the crop and livestock sectors. Results from multi-market models show that market liberalization has a substantial impact on incomes, production, and consumption in the LRAs. However, the impact seems to be less severe in Tunisia than in Jordan because of potential income-generating alternatives to traditional crop and livestock activities. The impact on imports is particularly important and more so for livestock products than for wheat and barley. At the community level, simulations were made on the impact of trade reforms such as changes in tariff structures for key crop and livestock commodities. Results show that market liberalization generates an important trade-off between income growth and income distribution. When substantial income increases are obtained at the community level, price policy changes tend to also generate a less equitable revenue