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Trade adjustment policies and income distribution in three archetype developing economies

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  • de Melo, Jaime
  • Robinson, Sherman

Abstract

This paper explores quantitatively the macroeconomic and distributional impacts on non-oil producing, semi-industrial developing countries of external shocks originating in the world economy—in particular, rising costs of imports and shrinking export markets. The empirical analysis is done with a computable general equilibrium (CGE) model. The effects of the same external shock are modelled for three different archetype economies: a primary exporter, a manufacturing exporter, and a closed economy. Three different policy-adjustment regimes are considered: devaluation, premium rationing of imports (import licenses), and premium rationing in an environment with a fixed real wage for unskilled labor. By making simple assumptions about the way socioeconomic groups operate to influence decision-making, the paper also examines how the struggle between the gainers and losers is likely to affect the policy regime to be chosen.
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Suggested Citation

  • de Melo, Jaime & Robinson, Sherman, 1982. "Trade adjustment policies and income distribution in three archetype developing economies," Journal of Development Economics, Elsevier, vol. 10(1), pages 67-92, February.
  • Handle: RePEc:eee:deveco:v:10:y:1982:i:1:p:67-92
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    Cited by:

    1. Haider A. Khan, 2007. "Social Accounting Matrices(SAMs) and CGE Modeling:Using Macroeconomic Computable General Equilibrium Models for Assessing Poverty Impact of Structural Adjustment Policies," CIRJE F-Series CIRJE-F-463, CIRJE, Faculty of Economics, University of Tokyo.
    2. Haider A. Khan, 2007. "Social Accounting Matrix: A Very Short Introduction for Economic Modeling," CIRJE F-Series CIRJE-F-477, CIRJE, Faculty of Economics, University of Tokyo.
    3. Spilimbergo, Antonio & Londono, Juan Luis & Szekely, Miguel, 1999. "Income distribution, factor endowments, and trade openness," Journal of Development Economics, Elsevier, vol. 59(1), pages 77-101, June.
    4. Antonio Spilimbergo & Juan Luis Londoño & Miguel Székely, 1997. "Distribución del ingreso, dotación de factores y apertura comercial," Research Department Publications 4089, Inter-American Development Bank, Research Department.
    5. Sonali Deraniyagala & Ben Fine, 2000. "New Trade Theory Versus Old Trade Policy: A Continuing Enigma," Working Papers 102, Department of Economics, SOAS, University of London, UK.
    6. Gupta, Sanjeev & Togan, Sübidey, 1982. "On managing adjustment to external shocks in oil importing developing countries," Kiel Working Papers 149, Kiel Institute for the World Economy (IfW).
    7. Svbidey Togan, 1983. "Effects of Alternative Policy Regimes on Foreign-Payments Imbalances," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 22(4), pages 239-260.
    8. Anne Maasland, 1992. "Consecuencias Distributivas de las Políticas de Ajuste: Una Revisión de Metodologías," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 29(86), pages 141-162.
    9. Dorosh, Paul A. & Sahn, David E., 2000. "A General Equilibrium Analysis of the Effect of Macroeconomic Adjustment on Poverty in Africa," Journal of Policy Modeling, Elsevier, vol. 22(6), pages 753-776, November.
    10. Benjamin, Nancy, 1996. "Adjustment and income distribution in an agricultural economy: A general equilibrium analysis of Cameroon," World Development, Elsevier, vol. 24(6), pages 1003-1013, June.
    11. Francois Bourguignon & William H. Branson & Jaime de Melo, 1989. "Adjustment and Income Distribution: A Counterfactual Analysis," NBER Working Papers 2943, National Bureau of Economic Research, Inc.
    12. Haider A. Khan, 2007. "Trade Liberalization and Poverty Reduction in General Equilibrium: The Role of Labor Market Structure," CIRJE F-Series CIRJE-F-462, CIRJE, Faculty of Economics, University of Tokyo.
    13. Zafar Iqbal & Rizwana Siddiqui, 2001. "Critical Review of Literature on Computable General Equilibrium Models," MIMAP Technical Paper Series 2001:09, Pakistan Institute of Development Economics.

    More about this item

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • F00 - International Economics - - General - - - General
    • F01 - International Economics - - General - - - Global Outlook
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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