CoPS/IMPACT Working Paper Number G-199

Title: Exporting Economic Models: CoPS' Experience in South Africa and Asia

Authors: Brian R. Parmenter and J. Mark Horridge


The ORANI-F model of the Australian economy is closely based on the original ORANI model (Dixon, Parmenter, Sutton and Vincent, 1982), which has been used for many policy analyses in Australia. However, as well as having a more recent database, ORANI-F is a forecasting model: it includes some dynamic mechanisms absent from ORANI.

We have created a generic version of ORANI-F as a pattern or template model to initiate collaborative CGE modelling with teams outside Australia. The ORANI-F documentation (Horridge, Parmenter and Pearson, 1993) is well adapted to skill transfer; it takes the reader through all the steps required for implementation of such a model, including its computer representation in GEMPACK, a flexible system for handling CGE models (Harrison and Pearson, 1993). The template model enables foreign collaborators to rapidly start running and analyzing their own simulations, so building up CGE experience.

Country-specific features are incorporated by adapting or extending the template model. We illustrate this with IDC-GEM, a CGE model of the South African economy that is based on ORANI-F, but contains several new elements. IDC-GEM distinguishes multiple households, differing by income and ethnicity. Labour is grouped by skill and ethnicity. The macro equation system, structured around a SAM, includes mechanisms to distribute labour income between the different households.

We present IDCGEM simulations of the effects of a South African tariff cut. Export-oriented industries tend to gain, at the expense of import-competing sectors like textiles and cars. This causes ethnic groups who work more in expanding industries to gain at the expense of other groups who are concentrated in shrinking sectors. On the demand side, car tariff cuts (leading to cheaper cars) disproportionately favour the richer households -- the poor buy few cars.

Similarly ORANI-F has been used as a basis for the CAMGEM CGE model of Thailand. Here, special additions include an explicit treatment of Thailand's large international tourism industry. We are also in the process of contructing a Vietnamese GGE model, again based on the template.

GEMPACK software, the template model, and documentation that explains both of these thoroughly, are three key advantages as we transfer our modelling technology to foreign environments.

JEL classification: D58, A29, C68

Keywords: CGE modelling, IDC-GEM model of South Africa,CAMGEM model of Thailand.

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