Do regional trade pacts benefit the poor ? An illustration from the Dominican Republic-Central American Free Trade Agreement in Nicaragua
The main objective of this paper is to provide an ex-ante assessment of the poverty and income distribution impacts of the Central American Free Trade Area agreement on Nicaragua. The authors use a general equilibrium macro model to simulate trade reform scenarios and estimate their price effects, while a micro-module maps these price changes into real income changes at the individual household level. A useful insight from this analysis is that even if the final total impact on poverty is not too large, its dispersion across households-due to their heterogeneity of factor endowments, inputs use, commodity production, and consumption preferences-is significant and should be taken into account when designing compensatory policies. Additionally, growth and redistribution decomposition show that, at least in the short to medium run, redistribution can be as important as growth. The main policy message that emerges from the paper is that Nicaragua should consider enlarging its own liberalization to countries other than the United States to boost trade-induced poverty reductions.
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- Elena Ianchovichina & Alessandro Nicita & Isidro Soloaga, 2002.
"Trade Reform and Poverty: The Case of Mexico,"
The World Economy,
Wiley Blackwell, vol. 25(7), pages 945-972, 07.
- Ianchovichina, Elena & Nicita, Alessandro & Soloaga, Isidro, 2001. "Trade reform and household welfare : the case of Mexico," Policy Research Working Paper Series 2667, The World Bank.
- Drusilla K. Brown & Kozo Kiyota & Robert M. Stern, 2005. "Computational Analysis of the US FTAs with Central America, Australia and Morocco," The World Economy, Wiley Blackwell, vol. 28(10), pages 1441-1490, October.
- Drusilla K. Brown & Kozo Kiyota & Robert M. Stern, 2005. "Computational Analysis of the U.S FTAs with Central America, Australia, And Morocco," Working Papers 527, Research Seminar in International Economics, University of Michigan.
- Chen, Shaohua & Ravallion, Martin, 2003. "Hidden impact ? Ex-post evaluation of an anti-poverty program," Policy Research Working Paper Series 3049, The World Bank.
- Timothy J. Kehoe, 2003. "An evaluation of the performance of applied general equilibrium models of the impact of NAFTA," Staff Report 320, Federal Reserve Bank of Minneapolis.
- Timothy J. Kehoe, 2003. "An Evaluation of the Performance of Applied General Equilibrium Models of the Impact of NAFTA," Levine's Working Paper Archive 506439000000000525, David K. Levine.
- Deininger, Klaus & Olinto, Pedro, 2000. "Why liberalization alone has not improved agricultural productivity in Zambia : the role of asset ownership and working capital constraints," Policy Research Working Paper Series 2302, The World Bank.
- Hugo Rojas-Romagosa & J.F. Francois & L. Rivera, 2008. "Economic perspectives for Central America after CAFTA; a GTAP-based analysis," CPB Discussion Paper 99, CPB Netherlands Bureau for Economic Policy Analysis.
- Thomas W. Hertel & Maros Ivanic & Paul V. Preckel & John A. L. Cranfield, 2004. "The Earnings Effects of Multilateral Trade Liberalization: Implications for Poverty," World Bank Economic Review, World Bank Group, vol. 18(2), pages 205-236. Full references (including those not matched with items on IDEAS)
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