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Trade and Employment: From Myths to Facts 4.A.2 Strengths and weaknesses of possible analytical approaches Qualitative approach Strengths Qualitative approaches, through the use of various case studies and focus-group discussions of informal worker and enterprises, could provide a very detailed understanding of the focus of the trade reforms (see, for example, Singh and Sapra, 2007). Information on the exact implementation procedures and the changes experienced by the group in which the researchers are interested can be obtained. Some disadvantages However, this approach cannot identify the exact linkage between, for example, trade or fiscal reforms and the welfare changes, as these cannot be tested. The results seen after a policy change could be due to other reasons or mixed outcomes, and no direct linkage can be traced without any quantitative connection. Moreover, in cases where there is no impact observed after a policy change, this could in fact be due to some countering factors, even though policy changes had a direct impact on the stated objective. Also, the conclusions drawn from qualitative analyses cannot be taken as general, and should be limited only to the specific group analysed. Such studies, in spite of being very valuable for in-depth understanding, have significant limitations. The inability of descriptive studies to provide a robust causality between impact and result is one of the reasons for the popularity of research based on quantitative approaches. Quantitative approaches Strengths Quantitative approaches, such as those based on CGE models, are numerical representations of economic theory and intuition. The models can be used to address a broad range of policy issues and can take into account “second-round” effects of policy changes (in circumstances where basic intuition can carry us only so far). – It is important to note that CGE models: – Can be used to decompose the effects of policy changes. – Can be used to track the distributional consequences of policy choices. – Can evaluate feasible policies or “policy packages” in a systematic fashion. – Can assist in policy formulation by permitting comparisons across the set of compatible policy combinations. – Are explicitly structural (they do not encounter the identification problems associated with econometric models). – Force modellers to be explicit about assumptions (which can be changed). – Offer considerable scope for altering aggregation (across sectors, institutions, households). 168
Chapter 4: Trade and the informal economy – Demand and enforce data consistency, thus identifying data gaps. – Demand clarity in specification. – Help prioritize areas of data collection. Some disadvantages – CGE models are complex and require skilled maintenance. – Quantitative CGE models are data-demanding: they do not tolerate inconsistencies in data. – CGE models are not “forecasting” tools. 4.A.3 Information to develop an informal-economy related CGE model In its simplest form, the application of CGE simulation techniques is identical to the procedures followed in disaggregating household categories in a standard SAM model. The steps outlined here relate to data requirements to build an informal economy in a SAM that drive the building of a CGE model for technical assistance projects. Social accounting matrix (base data set for developing CGE) Bangladesh Social accounting matrix, 1993–94; available at: http://www.ifpri.cgiar.org/datasets/results/taxonomy:5169?page=2. Social accounting matrix, 2005; available from Selim Raihan, University of Dhaka, Bangladesh, at: selim.raihan@gmail.com. Benin Social accounting matrix, 2006 (Benin’s Finance Ministry, Cotonou). Paquet and Savard (2009). Guatemala Alarcón, J. 2006. “Matriz de Contabilidad Social para Guatemala (2001)”, final report, Institute of Social Studies (ISS) and Secretaría General del Consejo Nacional de Planificación Económica de Guatemala (SEGEPLAN), The Hague, Feb. Indonesia Social accounting matrix, 1995 (in billions of rupiah at purchasers’ prices). Source: Biro Pusat Statistik. 1998. Sistem Neraca Sosial Ekonomi, 1995 (Jakarta), tables 3 and 6. Dimensions: 109 accounts and employment of 16 categories of labour. Imports: Imports c.i.f., duties and taxes are considered negative in the final demand columns of an input-output table. Available at: http://storm.ca/~sdamus/io_data.htm. 169
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Trade and Employment From Myths to
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Trade and Employment From Myths to
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PREFACE Trade negotiations -bilater
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Trade and Employment: From Myths to
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EDITORS AND CONTRIBUTORS EDITORS Ma
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ACKNOWLEDGEMENTS The editors wish t
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NEW EVIDENCE ON TRADE AND EMPLOYMEN
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Chapter 2: New evidence on trade an
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Region Annualized percentage change
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Region 1980 1985 1990 1995 2000 200
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Figure 2.4.b: Long-run association
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20 See Harrison and Rodriguez-Clare
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ASSESSING THE IMPACT OF TRADE ON EM
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