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Adjustment to trade reform in Ecuador

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  • Hugo Toledo
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    Abstract

    This paper simulates output adjustments and income redistribution in Ecuador with the emerging Free Trade Agreement of the Americas (FTAA). The Specific Factors (SF) model of production is used to develop comparative statistics elasticities of changing prices on factor prices and output as Ecuador adjusts to free trade. Skilled and unskilled labor stands to lose due to falling prices in the services and agricultural sectors. Returns to capital and output fall in sectors exposed to import competition while they increase in sectors expected to enjoy higher export demand. The magnitude of the adjustment is large.

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    File URL: http://www.tandfonline.com/doi/abs/10.1080/1384128042000328932
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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal Journal of Economic Policy Reform.

    Volume (Year): 8 (2005)
    Issue (Month): 1 ()
    Pages: 41-53

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    Handle: RePEc:taf:jpolrf:v:8:y:2005:i:1:p:41-53

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    Related research

    Keywords: Free trade; Income redistribution; Ecuador; Output adjustments; South America; JEL Codes: F10; F13;

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    1. Thompson, Henry, 1994. "An investigation into the quantitative properties of the specific factors model of international trade," Japan and the World Economy, Elsevier, vol. 6(4), pages 375-388, December.
    2. Edward J. Balistreri & Christine A. McDaniel & Eina Vivian Wong, 2003. "An Estimation of U.S. Industry-Level Capital-Labor Substitution," Computational Economics 0303001, EconWPA.
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