The reduction of the existing global distortions to agricultural incentives is sometimes stated as a priority
to fight poverty worldwide. But the impacts of global trade policy and domestic development policy reforms are
rarely, if ever, compared. Despite technical limitations hindering rigorous comparison of the overall growth
effects, also hampering cost-benefit analysis, this paper contributes at filling this gap by focusing on the
comparison of the distributional poverty impacts of both types of policies. It uses the MIRAGE global
computable general equilibrium –CGE- model feeding a national CGE model representing Malawi in 2007
linked to household survey to examine how different trade policy reforms by Malawi and the rest of the world
would impact poverty in Malawi. The country’s recent agricultural growth history due to the Fertilizer Input
Subsidy Program is replicated and compared with a more broad-based sectoral approach. The effects of
accelerating growth in agriculture and downstream sectors are compared with those of integrating in the regional
and multilateral markets. Non preferential trade policy reforms are found to be less favourable for poverty
reduction of the poorest than regional integration or preferential integration. Faster intensification and
diversification of agriculture is found to enable targeting the poorest that are less likely to be connected to
international markets. Therefore, while policy reforms generating growth in general may be good for some
poors, it is found that that not all policy reforms are equally good. Thus, despite the fact that trade policies could
help fight poverty in Malawi, there are no substitute to development policies, and if undertaken simultaneously,
their coherence should be checked thoroughly.
JEL codes: D58, O55, F13, O47 and Q17.
Keywords: Malawi, Economic Growth, Trade policy, Agricultural Policy, Poverty, Computable General
Equilibrium