AGRICULTURAL TRADE LIBERALISATION, AGRICULTURAL PRODUCTIVITY GROWTH AND EMPLOYMENT

Abstract

This paper reports an exploration of the impact of productivity growth in agriculture during a period of agricultural trade liberalisation, both domestic and global, on welfare and employment in the South African economy. The analysis are carried out using a computable general equilibrium (CCE) model calibrated to a social accounting matrix (SAM) for South Africa. The results indicate that agricultural trade liberalisation will have positive impacts upon the economy, but that the extent of the benefits is dependent on whether agriculture can remain competitive by improving productivity. There is a downside to increasing agricultural productivity; employment levels will fall unless there are other changes that stimulate employment. The results provide in sights into some of the reasons why agricultural employment in South Africa has fallen in recent years, despite the fact that liberalisaiion might be expected to enhance employment prospects.