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International Commodity Prices, Trade and Poverty in Uruguay


  • Carmen Estrades

    () (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)

  • María Inés Terra

    () (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)


Commodity prices have risen sharply since 2006. This may benefit developing countries specialized on primary exports, but poverty may increase. Uruguay is a net exporter of primary products and a net importer of oil. With the aim of analyzing the impact of soaring commodity prices and policy options, we apply a CGE model and microsimulations. A rise in food prices has a positive impact on the Uruguayan economy that is partially offset by the increase in oil prices. Even when poorest households’ income rises, their welfare falls because their consumption basket becomes more expensive. Poverty falls but extreme poverty increases. A policy of transfers to the poorest households seems to be the most efficient policy option to compensate poor households.

Suggested Citation

  • Carmen Estrades & María Inés Terra, 2009. "International Commodity Prices, Trade and Poverty in Uruguay," Documentos de Trabajo (working papers) 3209, Department of Economics - dECON.
  • Handle: RePEc:ude:wpaper:3209

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    References listed on IDEAS

    1. Derek Headey & Shenggen Fan, 2008. "Anatomy of a crisis: the causes and consequences of surging food prices," Agricultural Economics, International Association of Agricultural Economists, vol. 39(s1), pages 375-391, November.
    2. Thomas W. Hertel & Jeffrey J. Reimer, 2006. "Predicting the Poverty Impacts of Trade Reform," QA - Rivista dell'Associazione Rossi-Doria, Associazione Rossi Doria, issue 2, May.
    3. Maria Inés Terra & Marisa Bucheli & Silvia Laens & Carmen Estrades, 2005. "The effects of increasing openness and integration to the MERCOSUR on the Uruguayan labour market. A CGE modeling analysis," Documentos de Trabajo (working papers) 1205, Department of Economics - dECON.
    4. Carmen Estrades & María Inés Terra, 2007. "Policies against informality in segmented labour markets: a general equilibrium analysis applied to Uruguay," Documentos de Trabajo (working papers) 0408, Department of Economics - dECON.
    5. Ivanic, Maros & Martin, Will, 2008. "Implications of higher global food prices for poverty in low-income countries," Policy Research Working Paper Series 4594, The World Bank.
    6. Mitchell, Donald, 2008. "A note on rising food prices," Policy Research Working Paper Series 4682, The World Bank.
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    More about this item


    International Commodity Prices; Poverty Policies; Labor Issues; International Trade; Computable General Equilibrium Model.;

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade


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