Agriculture Reference
In-Depth Information
Constructng the 2010 world economy
As indicated earlier, our numerical analysis originates with the GTAP Version
5 global database for 1997. Rees and Tyers (2002) use a short run verson of
the above model to examne key changes n the Chnese economy between
1997 and 2001, including substantial trade reforms. We commence with
ther smulated mage of the 2001 world economy and proceed to use t as
a base from whch to construct a reference projecton of the 2010 economy.
This latter step is, however, a substantial task in itself. Not only does it
requre assumptons about the exogenous growth rates of prmary factor
supplies like labour, skill and physical capital, it also rests importantly on
assumptons about the pace of techncal change.
The pace of techncal change s ncorporated by constructng a set of
regon-wde total factor productvty growth rates that are consstent wth
forecast changes n populatons and labour supples on the one hand and
a set of non-controversal regonal GDP growth rates on the other. We do
this by making GDP growth rates exogenous in the first simulation and a
correspondng set of regon-wde total factor productvty growth rates
endogenous. In the subsequent counterfactual simulations, GDP is made
endogenous n each regon but the correspondng total factor productvty
growth emergng from the reference smulaton s held constant. Ths
ensures that, when subsequent simulations incorporate rising agricultural
protection to achieve self-sufficiency, total income growth in each region
adjusts. Ths approach to estmatng the effects of new agrcultural
protection is conservative in that, by making total factor productivity
coefficients independent of protection rates we expect to underestimate
ther contractonary effects.
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The exogenous population, labour force and
capital accumulation rates are listed in Table A8.4, along with the implied
rates of total factor productvty growth.
Trends in Chinese agricultural self-sufficiency
The dependence of Chna's domestc markets on trade s most clearly
evident from the ratio of exports to domestic value added in each sector,
or the correspondng rato of competng mports to value added. Estmates
of these for 2001 are listed in Table A8.5. They show that the most export-
