GSP Plus Status and Income Distribution: A CGE Model for Pakistan

Abstract

The purpose of the study is to investigate the impact of the Generalised System of Preferences (GSP) plus on a household income of Pakistan. The European Union, the largest trading partner of Pakistan, granted the status of GSP plus to Pakistan in December 2013. The study has used MyGTAP, developed by \citeA{minor2013mygtap} to calculate the impact at household level. This MyGTAP model uses the data of the latest available Social Accounting Matrix (SAM) to make changes in the standard GTAP by including multiple types of household and labor. The main findings of the simulations, run under MyGTAP model show a positive change in real GDP, merchandise imports and terms of trade while the first simulation shows a negative change in merchandise exports. Similarly, EBA status of Pakistan in the EU28 shows an increase in the household income with maximum gain by the household of rural Sindh with no agricultural land and a positive change in real wages of most of the factors. However, the large and medium agricultural household types show a negative change in household income in case of first simulation. Comparatively low improvement over urban and non-farm household of rural areas.