Impact of Tariff Liberalization on Economic and Social Benefits: Computable General Equilibrium Application to Kenya

Abstract

This study employed computable general equilibrium policy simulations to examine the impact of tariff liberalization on socioeconomic outcomes including living standards, cost of living, gross domestic product (GDP) from expenditure, total investment expenditure, intermediate input demand, output, value added, tariff revenue, sales tax revenue, indirect tax revenue direct income tax revenue, facto income tax revenue and factor demand. Findings from the simulations have policy implications touching on a need to embrace reciprocal tariff liberalization under agreements like strategic trade and investment partnerships and economic partnership agreements as they are associated with welfare gains, reduction in cost of living and GPD growth. Target policy incentives could be directed to specific domestic sectors since tariff liberalization has negative impact on investment expenditure......................