Global Food Price Shock and The Poor in Egypt and Ukraine: A Comparison of Policy Regimes and Reform Options
The steady surge in food prices observed since 2006-2007 has had substantial macroeconomic and social consequences around the globe. These recent developments bring a new perspective to the long ongoing discussion on the potential reforms of large food subsidy programmes in Egypt and other Middle Eastern and North African countries. Such programmes have helped to create a partly effective social safety net, though a poorly targeted one; however, they are increasingly draining budgetary resources.
The present study will seek to contribute to the ongoing food subsidy system reforms debate by building a Computable General Equilibrium (CGE) model for both Egypt and Ukraine. These two countries share several common characteristics, e.g., large territories and populations, similar income levels, while differing in some key dimensions, e.g., agricultural trade balance, subsidy schemes, etc.
The CGE model allows to look at the issues at stake from an applied comparative perspective, that is, to test various food prices scenarios and subsidy schemes under different fiscal assumptions and to analyse their respective effects on poverty and welfare.
The global food price surge provides a unique opportunity for the empirical examination, as opposed to hypothetical, of the actual impact of an extreme external shock on a variety of economic and social variables.
ECES-Egyptian Center for Economic Studies