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Distributive Effects of Regional Trade Agreements on the "Small Trading Partners": Mercosur and the case of Uruguay and Paraguay

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  • Borraz, Fernando
  • Rossi, Máximo
  • Ferrés, Daniel

Abstract

Although trade integration has potential benefits for developing countries, it is disputed whether trade liberalization processes are, per se, sufficient for poverty reduction and inequality abatement. Abundant work has analyzed the link between tariff reduction, poverty levels and inequality in both developed and developing countries. Gains from trade are generally observed. Still, those benefits from integration are generally unevenly distributed.In our analysis we explore how gains from trade have been distributed in the two minor trade partners of MERCOSUR: Uruguay and Paraguay. We study the link between trade, poverty and inequality by analyzing the impact of trade liberalization through two main transmission channels: prices and income. Our papers show that in the case of Mercosur, the effect of trade on poverty (and income inequality) varies per country and per region. In particular, we conclude that trade integration policies cannot be regarded as a poverty-alleviating policy, per se.

Suggested Citation

  • Borraz, Fernando & Rossi, Máximo & Ferrés, Daniel, 2011. "Distributive Effects of Regional Trade Agreements on the "Small Trading Partners": Mercosur and the case of Uruguay and Paraguay," Proceedings of the German Development Economics Conference, Berlin 2011 14, Verein für Socialpolitik, Research Committee Development Economics.
    • Handle: RePEc:zbw:gdec11:14
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    1. Marisa Bucheli & Máximo Rossi, 1994. "Distribución del ingreso en el Uruguay (1984-1992)," Documentos de Trabajo (working papers) 1094, Department of Economics - dECON.
    2. Antoni Estevadeordal & Junichi Goto & Raul Saez, 2000. "The New Regionalism in the Americas: The Case of MERCOSUR," IDB Publications (Working Papers) 9378, Inter-American Development Bank.
    3. Porto, Guido G., 2003. "Trade reforms, market access, and poverty in Argentina," Policy Research Working Paper Series 3135, The World Bank.
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    5. Galiano, Sebastian & Porto, Guido G., 2006. "Trends in tariff reforms and trends in wage inequality," Policy Research Working Paper Series 3905, The World Bank.
    6. Porto, Guido G., 2006. "Using survey data to assess the distributional effects of trade policy," Journal of International Economics, Elsevier, vol. 70(1), pages 140-160, September.
    7. Sanguinetti, Pablo & Traistaru, Iulia & Volpe Martincus, Christian, 2004. "Economic integration and location of manufacturing activities: Evidence from MERCOSUR," ZEI Working Papers B 11-2004, University of Bonn, ZEI - Center for European Integration Studies.
    8. Borraz Fernando & Lopez-Cordova Jose Ernesto, 2007. "Has Globalization Deepened Income Inequality in Mexico?," Global Economy Journal, De Gruyter, vol. 7(1), pages 1-57, February.
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    Cited by:

    1. Elizabeth Jane Casabianca, 2016. "Distributional effects of multilateral and preferential trade liberalisation: The case of Paraguay," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 25(1), pages 80-102, February.
    2. Elizabeth Jane Casabianca, 2012. "Distributional effects of preferential and multilateral trade liberalization: the case of Paraguay," FIW Working Paper series 083, FIW.
    3. Moncarz Pedro Esteban, 2023. "Impactos de bienestar de los aranceles y las licencias no automáticas a las importaciones. Evidencia para Argentina durante el período 2002-2012," Asociación Argentina de Economía Política: Working Papers 4671, Asociación Argentina de Economía Política.
    4. Jaime DE MELO & Julie REGOLO, 2013. "Labor Markets in Regional Trade Agreements: What Do We Know ?," Working Papers P69, FERDI.
    5. Victoria Pistikou, 2020. "The Impact of CEFTA on Exports, Economic Growth and Development," International Journal of Business and Economic Sciences Applied Research (IJBESAR), International Hellenic University (IHU), Kavala Campus, Greece (formerly Eastern Macedonia and Thrace Institute of Technology - EMaTTech), vol. 13(3), pages 15-31, December.
    6. Moncarz, Pedro & Barone, Sergio & Descalzi, Ricardo, 2018. "Shocks to the international prices of agricultural commodities and the effects on welfare and poverty. A simulation of the ex ante long-run effects for Uruguay," International Economics, Elsevier, vol. 156(C), pages 136-155.
    7. Antonio Martuscelli & Michael Gasiorek, 2019. "Regional Integration And Poverty: A Review Of The Transmission Channels And The Evidence," Journal of Economic Surveys, Wiley Blackwell, vol. 33(2), pages 431-457, April.
    8. Paolo Giordano & Kun Li, 2012. "An Updated Assessment of the Trade and Poverty Nexus in Latin America," IDB Publications (Working Papers) 79119, Inter-American Development Bank.
    9. Huw Lloyd-Ellis & Ardyn Nordstrom, 2021. "Trade, poverty and food security: A survey of recent research and its implications for East Africa," Working Paper 1460, Economics Department, Queen's University.
    10. Pedro Moncarz & Sergio Barone & Germán Calfat & Ricardo Descalzi, 2017. "Poverty Impacts of Changes in the International Prices of Agricultural Commodities: Recent Evidence for Argentina (An Ex-Ante Analysis)," Journal of Development Studies, Taylor & Francis Journals, vol. 53(3), pages 375-395, March.
    11. Amelia U. Santos‐Paulino & Alisa DiCaprio & Maria V. Sokolova, 2019. "The development trinity: How regional integration impacts growth, inequality and poverty," The World Economy, Wiley Blackwell, vol. 42(7), pages 1961-1993, July.
    12. Giordano, Paolo & Li, Kun, 2012. "An Updated Assessment of the Trade and Poverty Nexus in Latin America," IDB Publications (Working Papers) 4209, Inter-American Development Bank.

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    More about this item

    Keywords

    regional trade agreements; poverty; inequality;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • D30 - Microeconomics - - Distribution - - - General
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade

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