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The Socioeconomic and environmental effects of free trade agreements: a dynamic CGE analysis for Chile

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  • O'RYAN, RAÚL
  • DE MIGUEL, CARLOS J.
  • MILLER, SEBASTIAN
  • PEREIRA, MAURICIO

Abstract

This paper undertakes a quantitative analysis of the socioeconomic and environmental impacts of different trade agreements for Chile. A dynamic general equilibrium model is used to compare the consequences of unilateral liberalization and trade agreements with the European Union (EU) and the United States (USA). The results show that economic gains under the trade agreements are only significant if foreign investment increases or value added taxes are modified. Winners and losers depend on the agreement; however, unskilled labor-intensive sectors always progress. Consequently, these agreements seem to be good for the poorest groups. Some natural resource intensive sectors significantly increase their production with the EU and the US agreements, also increasing the environmental pressures. CO 2 and PM-10 emissions are not very different under these agreements as compared to business as usual – under which environmental pressures increase significantly. The results show the importance of economy-wide analysis of trade agreements in developing contexts.

Suggested Citation

  • O'Ryan, Raúl & De Miguel, Carlos J. & Miller, Sebastian & Pereira, Mauricio, 2011. "The Socioeconomic and environmental effects of free trade agreements: a dynamic CGE analysis for Chile," Environment and Development Economics, Cambridge University Press, vol. 16(03), pages 305-327, June.
  • Handle: RePEc:cup:endeec:v:16:y:2011:i:03:p:305-327_00
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    Cited by:

    1. Leone Walters & Heinrich R. Bohlmann & Matthew W. Clance, 2016. "The Impact of the COMESA-EAC-SADC Tripartite Free Trade Agreement on the South African Economy," Working Papers 201669, University of Pretoria, Department of Economics.
    2. Yuanying Chi & Zhengquan Guo & Yuhua Zheng & Xingping Zhang, 2014. "Scenarios Analysis of the Energies’ Consumption and Carbon Emissions in China Based on a Dynamic CGE Model," Sustainability, MDPI, Open Access Journal, vol. 6(2), pages 1-26, January.
    3. Farajzadeh, Zakariya & Zhu, Xueqin & Bakhshoodeh, Mohammad, 2017. "Trade reform in Iran for accession to the World Trade Organization: Analysis of welfare and environmental impacts," Economic Modelling, Elsevier, vol. 63(C), pages 75-85.
    4. Perrings, Charles, 2014. "Environment and development economics 20 years on," Environment and Development Economics, Cambridge University Press, vol. 19(03), pages 333-366, June.
    5. Boyer, Ivan & Schuschny, Andrés Ricardo, 2010. "Quantitative assessment of a free trade agreement between MERCOSUR and the European Union," Estudios Estadísticos 69, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    6. Siriwardana, Mahinda, 2014. "Australia’s new Free Trade Agreements with Japan and South Korea: Potential Impacts on the Resources and Agricultural Sectors and their Environmental Implications," 2014 Conference, August 28-29, 2014, Nelson, New Zealand 187405, New Zealand Agricultural and Resource Economics Society.
    7. de la Torre, Augusto & Didier, Tatiana & Pinat, Magali, 2014. "Can Latin America tap the globalization upside ?," Policy Research Working Paper Series 6837, The World Bank.

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