General equilibrium modelling in South Africa: What the future holds

Abstract

This paper provides an overview of the main research contributions of the past decade using general equilibrium models to analyse agricultural issues in South Africa. The methodological developments since the change to democracy ten years ago are viewed in the context of developments in this area of research carried out internationally. It will be shown in this paper that the modelling and computing techniques have vastly improved during the past decade, both in an ongoing attempt to refine existing models, and in an attempt to extend the modelling framework to make provision for issues that cannot be sufficiently captured in the standard comparative static models. These extensions include dynamic modelling, global modelling, environmental modelling and micro simulation. The paper highlights the non-trivial data requirements of this type of modelling. The national statistical agency, Statistics South Africa, supports general equilibrium modellers by their development of input-output tables, social accounting matrices and, more recently, supply and use tables. This decade has therefore witnessed an improvement in the data for the construction of national level social accounting matrices. Requirements for provincial level data have however not been met sufficiently, posing huge challenges for provincial and regional modelling. The lack of primary data has however stimulated development of advanced data estimation techniques that can be applied to overcome this data challenge. Application of general equilibrium techniques to analyse agricultural issues in South Africa still remains limited and substantial support and training of researcher is still needed to expand domestic capacity in this field of research.