March 29, 2019

The Tobacconomics Approach to Think Tank Capacity Building: Current Research from the First Year and the Way Forward, & Future Research

Over the past three weeks, we have taken to our blog to reflect on our first two years of the think tank capacity building project, “Accelerating Progress on Tobacco Taxes in Low- and Middle-Income Countries.” In this series, we have defined our purpose and direction for think tank capacity building. A few questions we initially asked ourselves were: Why capacity building? What capacities are we seeking to build? The answers to those questions lay the foundation to formulate our purpose and six core competencies of analysis in the economics of tobacco control.

Next, we determined which LMICs and regions to focus on, how think tank partners in each country and region would be selected, and who we established partnerships with through grant agreements. Last but not least, we discussed our research process, challenges we faced, and lessons learned along the way.

For the final blog of this series, we want to highlight some of the work from our think tank partners from this past year, as well as the future research plans from each country.

Research from the Pakistan Institute of Development Economics (PIDE) produced demand elasticity estimates and projected impacts of tax changes on government revenues and consumption. The Social Policy and Development Centre (SPDC) examined the macroeconomic impacts of tobacco tax increases in Pakistan. For the next phase of their research, PIDE will quantify the health and economic costs of tobacco use in Pakistan and SPDC will examine the extent of tobacco tax evasion through under-reporting and taking a broader examination of macroeconomic impacts of tobacco taxation.

We currently have partnerships with three think tanks in Indonesia: PRAKARSA, Tax Centre, and Centre for Indonesia’s Strategic Development Initiatives (CISDI). PRAKARSA’s research is focused on the illicit trade estimation in Indonesia, and Tax Centre is analyzing the tax legislation framework for tobacco industry and potential leakages. CISDI is currently conducting research on the estimation of the current cost of smoking to the universal health coverage system and who pays those costs.

In the past year, Development Policies and Research Centre (DEPOCEN) of Vietnam and the Institute of Public Policy and Management (IPPM) at the National Economics University have conducted research to estimate the level and trends in illicit trade in Vietnam. DEPOCEN is currently working on estimating individual responses to introduction of a specific tax on cigarettes, and also conducting a supply-side examination of the tobacco industry and how this might shift with economic liberalization and privatization in Vietnam.

BRAC Institute for Governance and Development (BIGD) in Bangladesh is estimating demand elasticity using household expenditure survey data and projecting impact of tax changes on government revenues and consumption in Bangladesh. The Ark Foundation will use the new GATS data to understand consumer behavioral responses to tobacco taxation and how specific tax increases impact government revenues and consumption.

The Institute for Economic Sciences (IES) in Serbia currently leads a regional consortium of six other think tanks in Southeastern Europe: Development Solutions Associates (DSA) in Albania, the University of Banja Luka in Bosnia and Herzegovina, the University of Split in Croatia, the Centre for Political Courage (CPC) in Kosovo, Analytica in Macedonia, and the Institute of Socio-Economic Analysis (ISEA) in Montenegro.

This past December, each think tank delivered high quality research estimating demand elasticities in each country and projecting the impacts of tax changes on government revenues and consumption. The consortium is now working on estimating the elasticity of demand among smokers to understand health impacts of tax increases and estimating elasticities of demand by income group to understand the distributional impacts of tax increases. Finally, a regional survey is planned to examine smoking prevalence and the level, and explore the determinants and estimating the level of illicit trade.

The South American Network on Applied Economics (Red Sur) is coordinating a network of seven think, each with a unique research focus. Fundação Centro de Estudos do Comércio Exterior (FUNCEX) in Brazil analyzed the demand side—reviewing tax structure and consumption patterns and estimated time-series demand for cigarettes. Pontificia Universidad Católica del Ecuador (PUCE) reviewed the supply and demand of tobacco consumption in Ecuador, by reviewing the regulatory and fiscal framework and estimation of cigarette elasticities.

Ethos, Laboratorio de Políticas Públicas Mexico developed a review of health costs attributable to tobacco consumption in the country and compared it with revenue collection. Additionally, they analyzed the observed relative decrease on tobacco taxation as a result of the current tax structure. Centro de Investigación en Alimentación y Desarrollo (CIAD) researched the effects of tobacco excise tax increases on consumption, estimated the elasticities by income level and developed an approach to estimate the impact of potential tax increases on poverty and inequality in Mexico. The Instituto de Estudios Peruanos in Peru researched updated previous demand estimations and simulated changes in the tobacco tax structure to evaluate alternative tax strategies. Centro iDeAS at the Universidad Nacional de San Martín in Argentina (UNSAM) researched the special tobacco fund and the tobacco supply chain. Finally, Instituto Torcuato Di Tella Argentina (ITDT) updated previous estimations on the demand of tobacco products to the analysis of recent tax reforms in Argentina.

In the coming year, we’ll be working with several think tanks in Mexico, Argentina and Brazil to further quantify the distributional impacts of tobacco taxation in these countries.

We hope you’ll stay tuned and let us know your thoughts on this series and share your think tank capacity building experiences with us by emailing and keeping up with our latest research products and events on twitter!

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