Using Partial Equilibrium Model in Measuring the Impact of Economic Liberalization Policies on Wheat Crop in Egypt

Abstract

The object of this study handle impact of economic liberalization policies on the producer, consumer and government for wheat crop in Egypt during the period 1976-2011 the time series period subject analysis is divided to three periods, the first one represent period before liberalization the second is partial liberalization, and the third is full liberalization. To achieve the objective the study applied many different analysis tools for exploring these impacts so it has been used econometric methods, dummy variables regression for structural changes and partial equilibrium model for agricultural price policies. Some of the results of the study are: 1- The economic liberalization policies have statistical significance effect with increasing area, yield, total production, farm gate price, quantity of consumption and quantity of import of wheat crop. 2- The nominal protection coefficient for products is 0.49, 0.76, 1.13 for the period before liberalization, the second is partial liberalization and the third is full liberalization, respectively. 3- The nominal protection coefficient for consumer is 0.70, 1.16, 1.56 for the period before liberalization, the second is partial liberalization and the third is full liberalization, respectively. 4- Net economic loss in production is about 27.3 million EGP for the period before liberalization, it rised to about 42.1 million EGP for the second is partial liberalization due to support and decrease to about 13.4 million EGP in the third is full liberalization. 5- Net economic loss consumption is about 32, 64.1, 470.4 million EGP for the period before liberalization, the second is partial liberalization and the third is full liberalization respectively. 6- Change in producer surplus rised loss about 229, 725 million EGP in the period before liberalization and partial liberalization respectively, while it has reached a gain of about 1003 million EGP in full liberalization. 7- Change in consumer surplus has reached a gain of about 420 million EGP in the period before liberalization, while it has reached a loss about 1061, 8178 million EGP in partial and full liberalization periods respectively. 8- Change in government revenue rised loss about 250.3 million EGP in the period before liberalization, while it has reached a gain of about 1679.8, 6691 million EGP in partial and full liberalization periods respectively. 9- Change in foreign exchange rised loss about 317.4 million EGP in the period before liberalization, while it has reached a gain of about 458.6, 1871.7 million EGP in partial and full liberalization periods respectively. 10- The net effect loss about 59.3, 106.7, 483.8 million EGP during the three periods respectively. Finally, the study recommends that the policy of liberalization have had obvious effects on wheat crop in Egypt. It is necessary to ensure minimum prices for wheat crop to such the domestic price with the world price. It is necessary to reactivate the role of agricultural cooperatives to reduce some of the negative effects of the policies of liberalization. Study and reform the policies of consumer subsidies to reduce the irrational behavior in the consumption expenditure.