Where Did the Trade Liberalization Drive Latin American Economy: A Cross Section Analysis
AbstractThe institutional reforms towards trade liberalizations in Latin America during the 1980s and the 1990s have introduced a good measure of import competition, but trade policies alone are not sufficient to create a competitive environment in an economy. The countries in Latin America have not had much experience with competition policies in the past. Combined with restrictive trade policies, the absence of competition policies has often led to monopolized domestic markets. The balance of payments crisis shocks have also contributed significantly to differences in growth performance and associated with a large decline of growth rates and develops into another crisis in the future. The trade competitiveness among the countries of Latin American region have revealed higher export sensitivity to world commodity prices, domestic absorption and economic activity combined with a high income elasticity of imports. This paper attempts to analyze the extent of trade competitiveness and its impact on the economic welfare measures in the Latin American countries. The analysis concentrates on the total factor productivity and exports in the countries of the region in reference to the economic growth pattern emerged during 1950-2003. The Cobb-Douglas function has been used to measure the total factor productivity and Nash equilibrium has been calculated to measure the economic welfare gains among the trading blocs in the Latin American region. The results of the study determine that international liquidity, financial soundness, real exchange rate depreciation and monetary policy play a critical role in reducing output losses and increasing the economic welfare gains.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by EconWPA in its series Econometrics with number 0504003.
Length: 25 pages
Date of creation: 11 Apr 2005
Date of revision:
Note: Type of Document - pdf; pages: 25
Contact details of provider:
Web page: http://18.104.22.168
Trade liberalization; institutional reforms; total factor productivity; regional growth; trading blocs; foreign direct investment; economic welfare; Latin America;
Other versions of this item:
- Rajagopal, 2006. "Where Did the Trade Liberalization Drive Latin American Economy: A Cross Section Analysis," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 6(2).
- C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
- C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-04-16 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Talan Iscan, 1998. "Exports and capital accumulation: some empirical evidence from the Mexican manufacturing industry," Applied Economics Letters, Taylor & Francis Journals, vol. 5(6), pages 355-360.
- Eva Paus & Nola Reinhardt & Michael Robinson, 2003.
"Trade Liberalization and Productivity Growth in Latin American Manufacturing, 1970-98,"
Journal of Economic Policy Reform,
Taylor & Francis Journals, vol. 6(1), pages 1-15.
- Eva Paus & Nola Reinhardt & Michael Robinson, 2003. "Trade liberalization and productivity growth in latin american manufacturing, 1970-98," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 6(2), pages 127-127.
- Joyce, J.P. & Kamas, L., 1997.
"Real and Nominal Determinants of Real Exchange Rates in Latin America: Short-Run Dynamics and Long-Run Equilibrium,"
97-05, Wellesley College - Department of Economics.
- Joseph Joyce & Linda Kamas, 2003. "Real and nominal determinants of real exchange rates in Latin America: Short-run dynamics and long-run equilibrium," Journal of Development Studies, Taylor & Francis Journals, vol. 39(6), pages 155-182.
- Perroni, Carlo & Whalley, John, 1996. "How Severe Is Global Retaliation Risk under Increasing Regionalism?," American Economic Review, American Economic Association, vol. 86(2), pages 57-61, May.
- Acharya, Sanjaya, 2011. "Making unilateral trade liberalisation beneficial to the poor," Socio-Economic Planning Sciences, Elsevier, vol. 45(2), pages 60-71, June.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA).
If references are entirely missing, you can add them using this form.