The supply-side effects of tobacco control policies. In Tobacco Control in Developing Countries. pp 311-341
Publication Source

The World Bank

Book chapter

This chapter examines whether tobacco-control policies will have a detrimental effect on countries’ economies, in particular on employment, and examines the impact of supply-side interventions. For the majority of countries, even stringent tobacco-control policies will have either a minimal impact or no net impact on total employment, as money that would formerly have been spent on tobacco tends to be spent on other goods and services. However, for a handful of tobacco-exporting countries that are not diversified, falling demand for tobacco would result in job losses, although such transitions would be gradual. Supply-side policies, such as price supports and quotas, provide incentives to grow tobacco, but their net impact on retail price, and hence consumption, is small. Given high demand and the presence of alternative suppliers, policies such as crop diversification or buy-outs are largely ineffective in reducing the supply of tobacco or its consumption. Nevertheless diversification, placed within broader rural development programs, can help meet the transition costs of the poorest farmers. Ultimately, the most effective supply-side policy may be to focus on reducing the demand for tobacco, and to allow supply to respond to slow changes in demand.