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Would Trade Liberalization Help the Poor of Brazil?

Author

Listed:
  • Ferreira Filho
  • Horridge, Mark
  • Joaquim Bento de Souza

Abstract

This paper addresses the potential effects of world agricultural trade liberalization on poverty and regional income distribution in Brazil, using an inter-regional applied general equilibrium (AGE) and a micro-simulation model of Brazil tailored for income distribution and poverty analysis by using a detailed representation of households. The model distinguishes 10 different labor types and has 270 different household expenditure patterns. Income can originate from 41 different production activities located in 27 different regions in the country. The AGE model communicates to a micro-simulation model that has around 112,000 Brazilian households and 264,000 adults. Poverty and income distribution indices are computed over the entire sample of households and persons, before and after the policy shocks. The simulated trade liberalization scenario causes agriculture to expand considerably and so, given the importance that agriculture still has for the poorest in Brazil, it has positive impacts on poverty in Brazil. The only states which show an increase in the number of poor households are Sao Paulo and Rio de Janeiro, where the bulk of the manufacturing activities in Brazil are concentrated. There is an even more positive impact on inequality. The higher fall in the poverty gap is shown to occur mainly on the poorest household groups, suggesting that the poorest among Brazil’s poor would benefit more from global trade liberalization.

Suggested Citation

  • Ferreira Filho & Horridge, Mark & Joaquim Bento de Souza, 2009. "Would Trade Liberalization Help the Poor of Brazil?," Agricultural Distortions Working Paper Series 52795, World Bank.
    • Handle: RePEc:ags:wbadwp:52795
    DOI: 10.22004/ag.econ.52795
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    References listed on IDEAS

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    1. Joaquim Bento de Souza Ferreira Filho & Carliton Vieira dos Santos & Sandra Maria do Prado Lima, 2007. "Tax Reform, Income Distribution and Poverty in Brazil: an Applied General Equilibrium Analysis," Working Papers MPIA 2007-26, PEP-MPIA.
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    6. repec:wbk:wbpubs:2611 is not listed on IDEAS
    7. Harrison, Glenn W. & Rutherford, Thomas F. & Tarr, David G. & Gurgel, Angelo, 2002. "Regional, Multilateral and Unilateral Trade Policies of MERCOSUR for Growth and Poverty Reduction in Brazil," Conference papers 331003, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
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    10. 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.
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    12. Green, Francis & Dickerson, Andy & Saba Arbache, Jorge, 2001. "A Picture of Wage Inequality and the Allocation of Labor Through a Period of Trade Liberalization: The Case of Brazil," World Development, Elsevier, vol. 29(11), pages 1923-1939, November.
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    Cited by:

    1. Alan Matthews, 2014. "An updated look at the impact of the EU's Common Agricultural Policy on developing countries," The Institute for International Integration Studies Discussion Paper Series iiisdp454, IIIS.
    2. Simonato, Thiago & van der Mensbrugghe, Dominique & Chepeliev, Maksym, 2025. "Global Chains, Regional Pains: The Local Socio-Economic Effects of U.S. Tariffs," 2025 AAEA & WAEA Joint Annual Meeting, July 27-29, 2025, Denver, CO 361031, Agricultural and Applied Economics Association.

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