Land Use in the Democratic Republic of Congo (DRC)

6 December 2013
Publication Type: Working Paper
JEL Code: C68, C88, D58, E26, O17, Q15, Q24

This paper examines the effects of land use in the DRC through the application of DRC formal-informal sector computable general equilibrium model, developed with the 2007 DRC Social Accounting Matrix. Two policy options are analysed. Firstly, the hypothetical policy change introduced in the short and long run application of this model is a land use subsidy where a 10% cut in the price of land both in the formal and informal sector is applied. In tracing the impact of this shock on the economy, as expected, gross domestic product and employment increase. Intuitively one would expect positive contribution on GDP (0.34% in the short run and 0.26% in the long run) and employment (0.25% in the short run). The significant increase in employment can be explained as any gains due to the land price decrease which influences the activity level. Secondly, land use productivity is achieved through the shock applied to the factor technical change which causes the producers to make use of the three primary inputs, namely labour, capital and land, as well as intermediate inputs in a more efficient way. The advantages of the productivity increase cause producers to gain considerable enhancement in competitiveness which leads to considerable higher growth in exports with export volumes increasing by 1.74% and 0.41% in the short and long run respectively.

Series title: Working paper 398
1 December 2013
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