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Impacts of Trade Liberalization on Poverty and Inequality in Argentina

Author

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  • Cicowiez, Martin
  • Diaz-Bonilla, Carolina
  • Diaz-Bonilla, Eugenio

Abstract

Using the most recent estimates of agricultural price distortions, this chapter studies the economic, poverty, and income inequality impacts of both global and domestic trade reform in Argentina, with a special focus on export taxes. Argentina offers an interesting case study as the only large agricultural exporter that has, at many points in its history, applied export taxes to several of its agricultural products. The chapter combines results from a global economy-wide model (World Bank’s Linkage model), a national CGE model, and microsimulations. The results suggest that liberalization of world trade (including subsidies and import taxes, but not export taxes), both for agricultural and non-agricultural goods, reduces poverty and inequality in Argentina. However, if only agricultural goods are included, indicators for poverty and inequality do not improve and even deteriorate somewhat. This is particularly the case if export taxes are eliminated. The chapter discusses the possible reasons for those results, offers some caveats, and suggests some lines for further research.

Suggested Citation

  • Cicowiez, Martin & Diaz-Bonilla, Carolina & Diaz-Bonilla, Eugenio, 2009. "Impacts of Trade Liberalization on Poverty and Inequality in Argentina," Agricultural Distortions Working Paper 52793, World Bank.
    • Handle: RePEc:ags:wbadwp:52793
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    References listed on IDEAS

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    1. Kym Anderson & Ernesto Valenzuela, 2007. "Do Global Trade Distortions Still Harm Developing Country Farmers?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 143(1), pages 108-139, April.
    2. Jeffrey G. Williamson, 2008. "Globalization and the Great Divergence: Terms of Trade Booms and Volatility in the Poor Periphery 1782-1913," NBER Working Papers 13841, National Bureau of Economic Research, Inc.
    3. Kym Anderson & Will Martin, 2009. "Distortions to Agricultural Incentives in Asia," World Bank Publications, The World Bank, number 2611.
    4. Almeida dos Reis, Jose Guilherme & Paes de Barros, Ricardo, 1991. "Wage inequality and the distribution of education : A study of the evolution of regional differences in inequality in metropolitan Brazil," Journal of Development Economics, Elsevier, vol. 36(1), pages 117-143, July.
    5. Diaz-Bonilla, Eugenio & Reca, Lucio, 2000. "Trade and agroindustrialization in developing countries: trends and policy impacts," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 23(3), September.
    6. Carlos F. Diaz Alejandro, 1963. "A Note on the Impact of Devaluation and the Redistributive Effect," Journal of Political Economy, University of Chicago Press, vol. 71, pages 577-577.
    7. Aurora Gómez Galvarriato & Jeffrey G. Williamson, 2008. "Was It Prices, Productivity or Policy? The Timing and Pace of Latin American Industrialization after 1870," NBER Working Papers 13990, National Bureau of Economic Research, Inc.
    8. Valenzuela, Ernesto & Kym Anderson, 2009. "Alternative Agricultural Price Distortions for CGE Analysis of Developing Countries, 2004 and 1980-84," GTAP Research Memoranda 2925, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    9. Valenzuela, Ernesto & Wong, Sara & Sandri, Damiano, 2007. "Distortions to Agricultural Incentives in Ecuador," Agricultural Distortions Working Paper 48394, World Bank.
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    More about this item

    Keywords

    Distorted incentives; agricultural and trade policy reforms; national agricultural development; Agricultural and Food Policy; International Relations/Trade; F13; F14; Q17; Q18;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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