The Impact of Trade Liberalization on Poverty in Kenya
Trade liberalization is currently being negotiated within the WTO multilateral trading framework under the Doha Development Agenda(DDA). Once an agreement is reached on modalities for undertaking trade liberalization, member countries will then proceed to open up their markets to international trade and competition. Most developing countries and least developed countries hope to achieve their development targets with more open economics; at the same time, they hope that, poverty, which is central in the public policy agenda, will also be reduced. It is important to determine what the likely impact of opening up the Kenyan economy would be. Of significant importance is the manner in which resources will be allocated and the resulting impact on consumption, incomes and the labour market in general, as these are the direct determinants of poverty. The research has examined the impact of trade liberalization on Poverty and Welfare in Kenya using two scenarios; first, tariffs are reduced for agricultural products by 0.71 percent while non-agricultural product tariffs are reduced by 10.42 percent while considering the special/sensitive products. In the second simulation, there is full elimination of tariffs on all products.