Trade Liberalization Consequences with an Emphasis on Food Security in Iran: Computable General Equilibrium Analysis

Trade liberalization entails benefits such as higher welfare and output. However, it may affect some variables like food security adversely. This study aims at simulating welfare and food security consequences of trade liberalization. Trade liberalization was investigated under two scenarios namely, the elimination of tariff as well as non-tariff barriers removal (free-trade) using a computable general equilibrium model based on the Iranian social account matrix. The results showed significant changes in output combination as it induces a reduction in output of agricultural sectors and agricultural-based industries. However, in the economy as a whole, it results in lower prices and higher GDP as well as higher consumption and welfare especially throughout higher income groups. It was also found that production and trade balance food security indices tend to decrease as trade barriers are removed and food items imports increases. While household food cover index shows higher food security, meaning that trade liberalization results in higher access to food but it induces more dependence on import-based food supply.