Poverty and Inequality Impact Analysis Regarding Cotton Subsidies : A Mali-Based CGE Micro-Accounting Approach

In this paper, we construct for Mali the first country-specific CGE model including a micro-simulation component so as to analyse how removing cotton subsidies in developed countries would impact poverty and inequality. To that effect, we have used the micro-accounting approach proposed by Chen and Ravallion. The issue has attracted significant attention, as it has played no small part in stalling the broader trade agenda. So far, research has been mainly carried out with a partial equilibrium analysis, whereas we use the first CGE micro-simulation model. A 17 sector CGE model comprising almost 5,000 households is used to demonstrate that removing cotton subsidies would contribute towards a significant decrease in poverty in Mali. Moreover, our results show that removing cotton subsidies while keeping other agricultural subsidies does not lessen the positive effects observed. It also appears that removing subsidies would marginally contribute towards easing inequality in Mali