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Trade Liberalisation and Child Welfare: Assessing the Impact of a Free Trade Agreement Between Peru and the USA

Author

Listed:
  • Escobal, Javier
  • Ponce, Carmen

Abstract

Peru is in the process of negotiating a free trade agreement (FTA) with the USA which would eliminate trade concessions on most goods and services. This paper analyses the potential impacts of such extensive trade liberalisation for Peru. The focus is on possible short-term welfare impacts and especially on child-related welfare outcomes. The effects of a full and abrupt elimination of tariffs as part of a FTA are estimated in a general equilibrium framework ? a branch of theoretical micro-economics which seeks to explain production, consumption and prices in a whole economy. Using this framework the connection between domestic prices and household welfare is modelled. Additionally, the demographic profiles of the most vulnerable population groups are analysed to assess whether children will be at an increased risk. The modelling exercise identifies that there will be potential negative short-term impacts of a FTA particularly for households in rural areas. Based on these findings the authors suggest a gradual reduction of tariffs to allow time for policies to be developed to boost rural productivity and the ability to withstand external competition. They conclude that a FTA could have different negative short-term effects on children’s welfare, such as increased child labour and school drop-out rates. Therefore they recommend the creation and strengthening of social safety nets and welfare programmes as a measurement to protect children from negative effects of a FTA with the USA.

Suggested Citation

  • Escobal, Javier & Ponce, Carmen, 2007. "Trade Liberalisation and Child Welfare: Assessing the Impact of a Free Trade Agreement Between Peru and the USA," MPRA Paper 56477, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:56477
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    File URL: https://mpra.ub.uni-muenchen.de/56477/1/MPRA_paper_56477.pdf
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    References listed on IDEAS

    as
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    2. L. ALAN WINTERS & NEIL McCULLOCH & ANDREW McKAY, 2015. "Trade Liberalization and Poverty: The Evidence So Far," World Scientific Book Chapters, in: Non-Tariff Barriers, Regionalism and Poverty Essays in Applied International Trade Analysis, chapter 14, pages 271-314, World Scientific Publishing Co. Pte. Ltd..
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    11. Escobal, Javier & Saavedra, Jaime & Suárez, Pablo, 2005. "Economic Shocks and Changes in School Attendance Levels and Education Expenditure in Peru," MPRA Paper 56481, University Library of Munich, Germany.
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    Cited by:

    1. Cueto, Santiago & Escobal, Javier & Penny, Mary & Ames, Patricia, 2011. "Tracking Disparities: Who Gets Left Behind? Initial Findings from Peru Round 3 Survey," MPRA Paper 56482, University Library of Munich, Germany.
    2. Santiago Cueto & Javier Escobal & Javier Escobal & Patricia Ames & Mary Penny, 2012. "¿Quién se queda atrás?: resultados iniciales del estudio Niños del Milenio: tercera ronda de encuestas en el Perú," Documentos de Trabajo (Niños del Milenio-GRADE) ninosm3r, Niños del Milenio (Young Lives).
    3. Nicola Jones & Andy Sumner, 2009. "Does Mixed Methods Research Matter to Understanding Childhood Well-Being?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 90(1), pages 33-50, January.
    4. Santiago Cueto & Gabriela Guerrero & Juan León & Alvaro Zevallos & Claudia Sugimaru, 2009. "Promoting Early Childhood Development through a Public Programme:Wawa Wasi in Peru(Promoviendo el desarrollo de la primera infancia a través de un programa público: Wawa Wasi en el Perú)," Documentos de Trabajo (Niños del Milenio-GRADE) ninosm51, Niños del Milenio (Young Lives).

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    More about this item

    Keywords

    Peru; free trade; trade liberalisation; poverty reduction;

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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