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Economic Integration, Poverty and Regional Inequality in Brazil

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  • Joaquim Bento de Souza Ferreira Filho
  • Mark Jonathan Horridge

Abstract

Gains and losses from trade liberalization are often unevenly distributed inside a country. For example, if budget shares vary according to household income, changes in commodity prices will redistribute an overall welfare change between household types. Household incomes will also be differentially affected. Sectoral differences in factor-intensity mean that changes in industrial structure cause redistribution of income between primary factors. Particular primary factors (such as capital, or less skilled labour) may contribute disproportionately to the incomes of certain household types. The fortunes of such households indirectly depend on the prospects of particular sectors. We emphasize these distributive issues, especially those arising from the income side. At the same time we distinguish households by regions (within the country). The regional distinction sharpens the contrast between groups of households. Particular regions have their own patterns of economic activity and so are differently affected by changes in the industrial protection structure. Since regional household incomes depend closely on value-added from local industries, economic change will tend to redistribute income between regional households. If the regional concentration of poverty is more than we could predict by regional primary factor endowments and industry structure, the addition of a regional dimension will add power to our analysis of income distribution beyond the mere addition of interesting regional detail. The paper deals with these issues more fully. We extend previous regional modeling of Brazil to include the intra-household dimension, addressing poverty and income distribution issues that may be caused by trade integration. An applied general equilibrium (AGE) inter-regional model of Brazil underlies our analysis, with a detailed specification of households. The model is static and solved with GEMPACK. The Representative Household (RH) hypothesis is abandoned; instead a micro

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Bibliographic Info

Article provided by FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil) in its journal Revista Brasileira de Economia.

Volume (Year): 60 (2007)
Issue (Month): 4 (February)
Pages: 363-388

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Handle: RePEc:fgv:epgrbe:v:60:n:4:a:3

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References

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  1. Mark Horridge, 2000. "ORANI-G: A General Equilibrium Model of the Australian Economy," Centre of Policy Studies/IMPACT Centre Working Papers op-93, Victoria University, Centre of Policy Studies/IMPACT Centre.
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Cited by:
  1. Edson Paulo Domingues & Kênia Barreiro de Souza, 2012. "The Welfare Impacts of Changes in the Brazilian Domestic Work Market," One Pager 180, International Policy Centre for Inclusive Growth.
  2. Dorothée Boccanfuso & G. Rodolphe A. Missinhoun & Luc Savard, 2010. "Réformes économiques et croissance pro-pauvre : une application macro-micro aux Philippines," Discussion Papers (REL - Recherches Economiques de Louvain) 2010032, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  3. Joaquim B de Souza Ferreira Filho & Carliton V dos Santos & Sandra M do Prado Lima, 2010. "Case Study: Tax reform, income distribution and poverty in Brazil: an applied general equilibrium analysis," International Journal of Microsimulation, Interational Microsimulation Association, vol. 3(1), pages 114-117.
  4. Arief Anshory Yusuf & Budy P. Resosudarmo, 2007. "On the Distributional Effect of Carbon Tax in Developing Countries: The Case of Indonesia," Working Papers in Economics and Development Studies (WoPEDS) 200705, Department of Economics, Padjadjaran University, revised Aug 2007.
  5. Wim Naudé & Riaan Rossouw, 2011. "Export diversification and economic performance: evidence from Brazil, China, India and South Africa," Economic Change and Restructuring, Springer, vol. 44(1), pages 99-134, April.
  6. Dorothée BOCCANFUSO & Luc Savard & A. Diagne, 2004. "Impacts De La Libéralisation Commerciale De L’Agriculture Sur La Pauvreté Et La Distribution De Revenus Au Sénégal," Cahiers de recherche 04-11, Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke.
  7. Yusuf, Arief Anshory & Resosudarmo, Budy P., 2007. "Searching for Equitable Energy Price Reform for Indonesia," MPRA Paper 1946, University Library of Munich, Germany.
  8. Arief Anshory Yusuf, 2008. "INDONESIA-E3: An Indonesian Applied General Equilibrium Model for Analyzing the Economy, Equity, and the Environment," Working Papers in Economics and Development Studies (WoPEDS) 200804, Department of Economics, Padjadjaran University, revised Sep 2008.
  9. Yusuf, Arief Anshory, 2006. "Constructing Indonesian Social Accounting Matrix for Distributional Analysis in the CGE Modelling Framework," MPRA Paper 1730, University Library of Munich, Germany.
  10. Aline Souza Magalhães & Edson Domingues, 2009. "Regional inequality and growth: the role of interregional trade in the Brazilian economy," Textos para Discussão Cedeplar-UFMG td359, Cedeplar, Universidade Federal de Minas Gerais.
  11. Hasegawa, Marcos & Guilhoto, Joaquim José Martins, 2006. "Investimento e produtividade dos fatores primários: uma análise de equilíbrio geral aplicado
    [Investment and productivity of primary factors: a general applied general equilibrium analysis]
    ," MPRA Paper 54555, University Library of Munich, Germany.
  12. Bittencourt, Mauricio V.L. & Kraybill, David S. & Larson, Donald W., 2006. "Consequences Of Trade Liberalization On Poverty And Income Distribution In Brazil," 2006 Annual meeting, July 23-26, Long Beach, CA 21128, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  13. Marie Daumal, 2010. "The impact of trade openness on regional inequality : the cases of India and Brazil," Working Papers DT/2010/04, DIAL (Développement, Institutions et Mondialisation).

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