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Home: Agricultural Economics: MACRO-ECONOMIC DIVISION

by Cecilia Punt

Welcome to the home page of the Macro Economics Division. The Macro Economics Division is one of two divisions of the Sub-programme for Macro Economics and Statistics in the Programme Agricultural Economics. The aim of this Sub-programme is to develop and maintain databases on various economic variables to carry out statistical and macro-economic analysis in order to inform planning and decision making.

Research areas

Industry analysis: Deciduous fruit

The Department informally collaborates with the Bureau for Food and Agricultural Policy (BFAP). BFAP was established in 2004 with the purpose of facilitating decision making in the South African agricultural sector as well as training of individuals in order to increase analytical and research skills available to the sector. Since the time of inception, BFAP has facilitated informed decision making by South African agribusiness, policy makers, trade negotiators and farmers through the development and operation of comprehensive analytical systems.

The analysis of world and domestic markets consists of baseline projections and scenario analyses of possible market and policy changes and the possible impacts of these changes on domestic markets and farm profitability and survivability. The baseline and scenario’s are constructed in such a way that the decision maker can form a picture of possible future changes and what their likely effects could be. Pro-active actions can thus flow from the use of these baselines and scenario’s.

A report, the South African Agricultural Baseline, is published annually and contains baseline projections on a wide range of agricultural commodities. Researchers at the Western Cape Department of Agriculture are specifically involved in modelling wine and fruit commodities. Currently the fruit commodities include apples, table grapes and pears. For more information contact Sanri Reynolds (SanriR@elsenburg.com) or visit www.bfap.co.za .

Demographic and household analysis

Labour Force Surveys data released by Statistics South Africa have been used to determine demographic indicators, including income, poverty and inequality for the Western Cape. Three demographic reports have been published for the Western Cape. The report for 2000 was based on the Labour Force Survey as well as the Income and Expenditure Survey. The second report was for 2005 and uses only the Labour Force Survey for 2005. The most recent demographic report for the Western Cape uses data from the Labour Force Surveys of 2000 until 2007 and looks at trends over time. The focus of these reports is on households that derive at least 50 per cent of their labour income from agricultural activities.

The Income and Expenditure Survey of 2005/6, which is a household level survey, was released by Statistics South Africa during 2008 and information form this survey feed into various studies.

STATA software is used to analyse the survey data.

Social Accounting Matrices and input-output tables

A social accounting matrix (SAM) is a type of database that is a complete and consistent set of economic and social accounts for a country and/or region and can be used as a framework to impose completeness and consistency on the majority of economic and social data collected for a region. A SAM provides information on topics such as the structure of production, the distribution of income, and even trade relationships. An appropriately structured SAM should provide the bulk of data required for whole economy models, e.g. computable general equilibrium (CGE) models (see below), which can be used to examine a range of policy questions.

Two SAMs have been compiled for the Western Cape, but using different techniques.
The first SAM was compiled as an input-output SAM with commodity by commodity classification. The SAM is for the base year 1993 and consists of 106 accounts, of which 48 are production accounts. The SAM was used in a semi-closed input-output model.
The second SAM follows the structure of a supply and use SAM, with industry and commodity accounts. The SAM is also for the base year 1993 and has 291 accounts, which can be grouped into 6 broad aggregates – commodities (117), activities (or industries) (90), factors (42), institutions (37), capital (2) and trade (3). The institutions and trade accounts consist of sub-aggregates – households (30), incorporated enterprises (1) and government (6) for the institution accounts and rest of South Africa and Rest of the World for the trade accounts. The SAM was developed with the aim of using it for the calibration of a computable general equilibrium (CGE) model.

In recent years social accounting matrices have been carried out as part of the Provincial Decision-Making Enabling (PROVIDE) project at Elsenburg. The SAMs relevant for the Western Cape includes the national SAM with provincial level detail for the agricultural, household and factor accounts; and also the regional SAM for the Northern Cape and Western Cape region. Both the national and regional SAMs are for the base year 2000. Aggregated versions of the PROVIDE Project SAMs and derived input-output tables are available for download on the website. Visit the project website for more information on these SAMs at www.elsenburg.com/PROVIDE.

An input-output table for 2005 base year was prepared and submitted to the Version 7 Global Trade Analysis Project (GTAP) multi-country database.

General equilibrium modelling and multiplier analysis

Fixed-price models, e.g. SAM-Leontief models, as well as flex-price models, such as computable general equilibrium (CGE) models, are calibrated with the data contained in SAMs. Both types of models can be used for policy analysis. Analysis is based on the process of identifying and quantifying, where possible, the costs and benefits of alternative choices to create "what if" scenarios.

Previous research applications using fixed price models include the evaluation of possible implications of the next round of WTO negotiations on the economy of the Western Cape, the estimation of the implications of supply-side constraints on agriculture in the province, and the impact of fuel price increases on the Western Cape economy.

With respect to fiscal policies, CGE models can be used to identify the implications of different tax regimes on the economy. It can show how changes in trade taxes will impact the government’s budget, or calculate optimal tax regimes subject to given constraints.

Macro-economic analysis includes global themes such as international competitiveness, market deregulation and trade liberalisation. In addition, themes such as redistribution, employment creation, legislative and environmental issues are also addressed.

Trade policy issues that can be analysed using CGE models include SACU trade negotiations, the negotiations of the World Trade Organisation (WTO), and the re-negotiation of the Lomé Convention.

Reports

Contact us

Cecilia Punt (Manager)
Tel no: 021 808 5198
Cell no: 082 941 3301
E-mail: ceciliap@elsenburg.com
Interest: General Equilibrium Modelling, Social Accounting Matrices, Multisector Analysis

Sanri Reynolds (Principal Agricultural Economist)
Cell no: 084 701 7487
E-mail: SanriR@elsenburg.com
Interest: Deciduous Fruit Industry, Consumer Trends, Econometrics

Elné Jacobs (Principal Agricultural Economist)
Tel no: 021 808 5205
Cell no: 073 185 2181
E-mail: elnej@elsenburg.com
Interest: Development Economics, Labour Economics, Institutional Economics and Survey Data Analysis

Gillian Denyssen (Acting Secretarial Assistant)
Tel no: 021 808 5212
Fax no: 021 808 5210
E-mail: gilliand@elsenburg.com

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