A newly published working paper by the Regional Strategic Analysis and Knowledge Support Systems for East and Central Africa (ReSAKSS-ECA) explores the use of a dynamic Computable General Equilibrium (CGE) model to demonstrate the value of the livestock sector to the economy.

According to the paper, limitations in the existing economic models and methodological issues lead to underestimation of the potential of the livestock sector in supporting economic growth.  An effective economic model accurately captures both the biological and dynamic relationships between the stocks and flows of livestock, and the economic linkages between the sector and the rest of the economy.

This study conducted by ReSAKSS researchers Paul Guthiga, Hannah Nyota and Joseph Karugia, and Ermias Engida from Ethiopian Development Research Institute (EDRI) aimed at enhancing an existing dynamic CGE model ability to better model the livestock sector by capturing its complete natural picture through coupling of the stock-flow feature of the sector into the model, and to help overcome these methodological issues and the shortcomings in the existing economy-wide modelling.

Using Kenya as an example, the researchers modified the standard CGE model of the International Food Policy Research Institute (IFPRI) to fit the Kenyan economy and incorporate the features of an effective economic model. In addition, a separate herd dynamics module was developed which enabled us to specify stock-flow relationship, distinguishing between the capital role of livestock and the flow of livestock products.

Results from the model shows that the potential contribution of the livestock sector to the overall growth of the Kenyan economy is significant. It immensely contributes to GDP and helps combat food insecurity in the country. Total factor productivity shocks (TFP) was applied on the three agricultural subsectors: cereals, livestock and other agriculture to compare their contribution to economic growth. The TFP revealed that the livestock sector has strong growth potential.

Read the paper.

This article is written b y Andrew Wangili, Communication intern at ILRI.