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An exporatory assessment of the potential impact of the free trade area of the americas on the andean community

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  • Ricardo Arguello

Abstract

An exploratory evaluation of the potential impact of the Free Trade Area of the Americas on the Andean Community is performed through a simulation using GTAP. Hosted by Purdue University, GTAP is a multi-region, applied general equilibrium model widely used to analyze global economic issues. The experiment is performed in a perfect competition, constant returns to scale framework and eliminates tariffs on goods trade between Western Hemisphere countries. The simulation results show modest but positive net welfare gains accruing to the Andean Community, largely due to allocative efficiency gains. Adverse terms of trade effects and trade diversion considerably reduce potential gains. Economic distortions within the Andean Community also have negative effects on welfare. Trade becomes more concentrated in bilateral flows with the United States and real returns on factors of production show improvements.

Suggested Citation

  • Ricardo Arguello, 2004. "An exporatory assessment of the potential impact of the free trade area of the americas on the andean community," Borradores de Investigación 4332, Universidad del Rosario.
    • Handle: RePEc:col:000091:004332
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    File URL: http://repository.urosario.edu.co/bitstream/handle/10336/10848/4332.pdf
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    References listed on IDEAS

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    1. Kehoe, Timothy J., 2002. "An Evaluation of the Performance of Applied General Equilibrium Models of the Impact of NAFTA," Conference papers 331066, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
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    6. Brockmeier, Martina, 2001. "A Graphical Exposition Of The Gtap Model," Technical Papers 28706, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    7. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Commercial Policy and Trade Regulation; Economic Integration; Policy and Empirical Studies;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

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