Regional, Multilateral, and Unilateral Trade Policies of MERCOSUR for Growth and Poverty Reduction in Brazil

Abstract

Harrison, Rutherford, Tarr, and Gurgel estimate thatThe agreement with the EU is almost twice as valuable the Free Trade Agreement of the Americas (FTAA), the for Brazil as the FTAA, but this conclusion depends on EU-MERCOSUR agreement, and multilateral trade the EU providing tariff free access to its agricultural policy changes will all' be beneficial for Brazil. The markets as part of the agreement. If the United States and Brazilian government strategy of simultaneously the EU do not permit access to their most highly negotiating the FTAA and the EU-MERCOSUR protected markets, the FTAA will be much more valuable agreement, while supporting multilateral liberalization to Brazil than the EU-MERCOSUR agreement. The through the Doha Agenda, will increase the benefits of FTAA contains a large number of markets outside of the each of these policies.United States, so there remains a lot of value in the The authors estimate that the poorest households FTAA for Brazil, even if the United States protects its typically gain roughly three to four times the average for most highly protected markets. Brazil from any of the policies considered. This is Both the FTAA and the EU-MERCOSUR agreements because the structure of tariff protection in Brazil favors are net trade-creating for the countries involved, but capital-intensive manufacturing. Tariff liberalization in excluded countries almost always lose from the Brazil will shift production toward labor-intensive agreements. The authors estimate that multilateral trade manufacturing and agriculture. Due to the increase in liberalization of 50 percent in tariffs and export subsidies demand for labor intensive sectors, the wage rate of results in gains to the world more than four times greater unskilled labor will increase, and the primary than either the FTAA or the EU-MERCOSUR determinant of the impact on the poor from trade agreement. This shows the continued importance to the liberalization is the wage rate of unskilled labor.world trading community of the multilateral negotiations.This paper-a product of Trade, Development Research Group-is part of a larger effort in the group to assess the impact of trade liberalization on poverty. Copies of the paper are available free from the World Bank,

Poverty Implications of Agricultural and Non-Agricultural Price Distortions in Pakistan

“…Recent CGE models take account of several household types, often distinguishing them by income level. For example, Harrison et al (2003) use a multicountry model drawing on data from the Global Trade Analysis Project and additional data on Brazil in which they recognize 10 urban and 10 rural household types according to income. Because they exhibit varying expenditure shares and differences in incomes and sources of income, the households are affected differently by economic changes.…”

Poverty and Distributional Impact of Economic Policies and External Shocks

“…A 1997 Social Accounting Matrix (SAM) has been used as the initial benchmark equilibrium for the CGE model. This SAM has been assembled from various sources incorporating data from the 1997 Input Output table, information from the SAM assembled by Harrison, Rutherford, Tarr, and Gurgel (2003), and the 2001 PNAD household survey. For the purposes of this model the full SAM -which includes 41 sectors, 41 commodities, 12 factors (skilled and unskilled labor by gender and by farm and non-farm occupation, agricultural and non-agricultural capital, land and natural resources), an aggregate household account, and other accounts (government, savings and investment, and rest of the world>7° -has been aggregated to a smaller size and it comprises the accounts shown in The CGE model is based on a standard neoclassical dynamic general equilibrium model and the following subsections describe its main features.…”

Structural Change And Poverty Reduction In Brazil : The Impact Of The Doha Round

“…A 1997 Social Accounting Matrix (SAM) has been used as the initial benchmark equilibrium for the CGE model. This SAM has been assembled from various sources incorporating data from the 1997 Input Output table, information from the SAM assembled by Harrison, Rutherford, Tarr, and Gurgel (2003 PNAD household surveys. For the purposes of this model the full SAM -which includes 41 sectors, 41 commodities, 12 factors (skilled and unskilled labor by gender and by farm and non-farm occupation, agricultural and non-agricultural capital, land and natural resources), an aggregate household account, and other accounts (government, savings and investment, and rest of the world) 8 -has been aggregated to a smaller size and it comprises the accounts shown in Table 1.…”