Computable general equilibrium modelling techniques

In line with the government of Egypt approach of evidence based policies and recognizing the importance of investing in its human capital, the UNESCWA and ILO's computable general equilibrium modelling techniques were presented during a one-day workshop to support the Ministry of Planning and Economic Development representatives in developing national economic strategies, planning and policy analysis.

Press release | 27 November 2022
Cairo (ILO News)- Funded by the Swedish International Development Agency (Sida), the International Labour Organization (ILO) project – Advancing the Decent Work Agenda in North Africa (ADWA'), works at the policy-making level in order to support evidence- based decisions on key dimensions of the Decent Work Agenda.

In Egypt, ADWA’ team has worked closely with the Ministry of Planning and Economic Development and United Nations Economic and Social Commission for Western Asia (UNESCWA) to present the Computable General Equilibrium (CGE) modelling techniques for the effective formulation and evaluation of evidence-based policies towards job-rich growth for Egypt.

The partnership was developed in line with the GOE approach of evidence-based policies. Such a model could be an important instrument for the MPED to explore policy options and strategies to benefit exports, growth and full employment. The CGE model in fact allows testing the respective benefits of a variety of fiscal and public investment measures, as well as of exogenous shocks on growth, employment and inequality.

“The CGE interface and toolbox comes to support the GOE approach of formalizing effective evidence-based policies to support the government efforts and strategies to achieve its objectives within phase 2 of the structural reform program regarding exports, growth and full employment” said Hanan Nazier, Head of Labour Market policies Unit and advisor to the National Wage Council, Ministry of Planning and economic development.

In particular, the CGE modelling interface is directed towards imposing greater rigor and sound economic analysis in the structure, content and policy process, which in turn makes it more resistant to political pressure and more likely to realize the desired outcomes. In addition, the added value of the CGE interface is that it can:
  • Support more effective dialogue within the government regarding national economic strategies and policy frameworks;
  • Provide economic analysis based on sound macro-economic theory and national data;
  • Deliver impact assessments that takes into consideration the interdependencies within a country’s economy;
  • Assist in determining the budgetary requirements linked to policies;
  • Allow for a cost-benefit analysis of policies;
  • Assess how policies will impact the most vulnerable populations.
Through the workshop, MPED’s officials from relevant technical units were able to familiarize and strengthen their capacity to utilize such tool for the formulation of sustainable policies. The training was headed by ESCWA trainer with technical and logistical input from the ILO and consisted in a series of brainstorming sessions, with a strong participation from the audience.

“The toolbox offered by the CGE interface will enable the evaluation of the anticipated effects of a policy, in order to better assess policy options/objectives and subsequently appraise their impact”, said Mohamed Hedi Bchir, Chief of section at UNESCWA and lead facilitator of the training.

The workshop represented an important step forward along a continuing process and provided the opportunity to reaffirm that “The CGE model is not set in stone but was designed and conceived to improve over time. Moving forward, it is our hope that through complementary work we are carrying out on the SAM, we will be able with MPED to further enhance both the informal economy and gender dimensions of the model” - Coen Kompier, International Labour Standards Specialist, Country Office for Egypt and Eritrea.