The Impacts of Trade Liberalization on Poverty in Nigeria : Dynamic Simulations in a CGE Model

The study examines the effects trade liberalisation will have on poverty in Nigeria. Previous studies have been limited by static analysis and partial equilibrium analysis. We use a Dynamic Computable General Equilibrium Model to analyse this issue. The positively affected sectors are capital intensive therefore capital income improves over time while land and labour income reduce. This has positive implications for urban households and negative for rural households due to the dependence of the later on mostly land and labour income. As a result, urban poverty decreases in the short and long run while rural poverty increases in both periods. For trade liberalization to have a pro-poor effect, policies to improve the agricultural sector will have to be implemented before or concurrently with it. In this way the rural areas which obtain most of their income from this sector will respond more positively to trade liberalization