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Gains from Trade: the Costa Rican Case

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  • Alonso Alfaro-Ureña

    (Economic Division, Central Bank of Costa Rica)

Abstract

One of the oldest and most interesting questions in the economic literature is how to quantify the gains from trade. Recently, Costinot & Rodrguez-Clare (2013) (CRC) developed a methodology that uses the World Input Output Database (WIOD) to compute this value for a list of countries. Costa Rica has never been part of this database given the lack of appropriate data. However, with the publication of a new Input Output Table for Costa Rica, the Foreign Trade Ministry (COMEX) was able to develop a domestic version of the WIOD that includes the country. This allows for counterfactual exercises in which we compare the current situation with autarky and other average tariff levels. As CRC show, this can be done using different productive structures and competition schemes in the economy. The results can provide valuable information on how much a small open economy like Costa Rica's can benefit from international trade, and what are the differences in the results when compared to similar countries. ***Resumen: Uno de los retos más interesantes de la literatura económica es la cuantificación de las ganancias del Comercio. Recientemente, Costinot & Rodríguez-Clare (2013) (CRC) desarrollaron una metodología que utiliza la World Input Output Database (WIOD) para calcular este valor para una lista de países. Costa Rica nunca ha sido parte de esta base de datos debido a que no contaba con los datos apropiados. Sin embargo, la publicación de la nueva Matriz Insumo Producto para Costa Rica permitió al Ministerio de Comercio Exterior (COMEX) desarrollar una versión de la WIOD que incluye al país. Esto permite realizar ejercicios contrafactuales en los que se compara la situación vigente con autarquía y otros niveles de tarifas promedio. Como CRC muestran, esto se puede hacer considerando diferentes estructuras productivas y esquemas de competencia. Los resultados pueden constituir información valiosa sobre cuánto puede ganar una economía pequeña y abierta como la costarricense gracias al comercio internacional, y en qué se diferencia de otros países en una situación similar.

Suggested Citation

  • Alonso Alfaro-Ureña, 2019. "Gains from Trade: the Costa Rican Case," Documentos de Trabajo 1602, Banco Central de Costa Rica.
    • Handle: RePEc:apk:doctra:1602
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    File URL: https://repositorioinvestigaciones.bccr.fi.cr/handle/20.500.12506/279
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    Keywords

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    JEL classification:

    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • F10 - International Economics - - Trade - - - General
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General

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