Economic and Distributional Impacts of Free Trade Agreements : The Case of Indonesia
As preferential trade agreements are growing in number and depth, assessment of their economic impacts has become more important to inform policy-makers facing a multitude of potential preferential trade agreements. This paper provides novel ex ant...
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World Bank, Washington, DC
2019
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| Online Access: | http://documents.worldbank.org/curated/en/926241569328187590/Economic-and-Distributional-Impacts-of-Free-Trade-Agreements-The-Case-of-Indonesia http://hdl.handle.net/10986/32450 |
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okr-10986-324502022-09-20T00:13:00Z Economic and Distributional Impacts of Free Trade Agreements : The Case of Indonesia Cali, Massimiliano Maliszewska, Maryla Olekseyuk, Zoryana Osorio-Rodarte, Israel TRADE AGFREEMENT CGE MODEL POVERTY INCOME DISTRIBUTION DISTRIBUTIONAL IMPACT FREE TRADE AGREEMENT TRADE POLICY TRADE LIBERALIZATION PREFERENTIAL TRADE AGREEMENT As preferential trade agreements are growing in number and depth, assessment of their economic impacts has become more important to inform policy-makers facing a multitude of potential preferential trade agreements. This paper provides novel ex ante estimates of the impacts of two key preferential trade agreements currently negotiated by Indonesia, the largest economy in Southeast Asia. The paper then compares these estimates with those of other preferential trade agreements that Indonesia may negotiate in the future. To that end it, combines a dynamic, multi-country computable general equilibrium model and a microsimulation tool linking the macroeconomic results to household-level welfare. The results suggest that, among the preferential trade agreements considered, the European Union–Indonesia Comprehensive Economic Partnership Agreement (EU-CEPA) is expected to yield the largest gains for Indonesia in income, output, and exports. This result is due to a combination of large expected reductions in trade barriers and a high share of international trade between the partners. These macro effects translate into the highest expected income growth relative to the other preferential trade agreements at every point of the income distribution. However, the gains for the EU-CEPA are proportionately larger for richer households, unlike the other agreements considered. The regressive gains are mainly due to the increase in skill wage premia spurred by the additional demand for skill-intensive sectors, especially services. 2019-09-26T15:14:43Z 2019-09-26T15:14:43Z 2019-09 Working Paper http://documents.worldbank.org/curated/en/926241569328187590/Economic-and-Distributional-Impacts-of-Free-Trade-Agreements-The-Case-of-Indonesia http://hdl.handle.net/10986/32450 English Policy Research Working Paper;No. 9021 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper East Asia and Pacific Indonesia |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
TRADE AGFREEMENT CGE MODEL POVERTY INCOME DISTRIBUTION DISTRIBUTIONAL IMPACT FREE TRADE AGREEMENT TRADE POLICY TRADE LIBERALIZATION PREFERENTIAL TRADE AGREEMENT |
| spellingShingle |
TRADE AGFREEMENT CGE MODEL POVERTY INCOME DISTRIBUTION DISTRIBUTIONAL IMPACT FREE TRADE AGREEMENT TRADE POLICY TRADE LIBERALIZATION PREFERENTIAL TRADE AGREEMENT Cali, Massimiliano Maliszewska, Maryla Olekseyuk, Zoryana Osorio-Rodarte, Israel Economic and Distributional Impacts of Free Trade Agreements : The Case of Indonesia |
| geographic_facet |
East Asia and Pacific Indonesia |
| relation |
Policy Research Working Paper;No. 9021 |
| description |
As preferential trade agreements are
growing in number and depth, assessment of their economic
impacts has become more important to inform policy-makers
facing a multitude of potential preferential trade
agreements. This paper provides novel ex ante estimates of
the impacts of two key preferential trade agreements
currently negotiated by Indonesia, the largest economy in
Southeast Asia. The paper then compares these estimates with
those of other preferential trade agreements that Indonesia
may negotiate in the future. To that end it, combines a
dynamic, multi-country computable general equilibrium model
and a microsimulation tool linking the macroeconomic results
to household-level welfare. The results suggest that, among
the preferential trade agreements considered, the European
Union–Indonesia Comprehensive Economic Partnership Agreement
(EU-CEPA) is expected to yield the largest gains for
Indonesia in income, output, and exports. This result is due
to a combination of large expected reductions in trade
barriers and a high share of international trade between the
partners. These macro effects translate into the highest
expected income growth relative to the other preferential
trade agreements at every point of the income distribution.
However, the gains for the EU-CEPA are proportionately
larger for richer households, unlike the other agreements
considered. The regressive gains are mainly due to the
increase in skill wage premia spurred by the additional
demand for skill-intensive sectors, especially services. |
| format |
Working Paper |
| author |
Cali, Massimiliano Maliszewska, Maryla Olekseyuk, Zoryana Osorio-Rodarte, Israel |
| author_facet |
Cali, Massimiliano Maliszewska, Maryla Olekseyuk, Zoryana Osorio-Rodarte, Israel |
| author_sort |
Cali, Massimiliano |
| title |
Economic and Distributional Impacts of Free Trade Agreements : The Case of Indonesia |
| title_short |
Economic and Distributional Impacts of Free Trade Agreements : The Case of Indonesia |
| title_full |
Economic and Distributional Impacts of Free Trade Agreements : The Case of Indonesia |
| title_fullStr |
Economic and Distributional Impacts of Free Trade Agreements : The Case of Indonesia |
| title_full_unstemmed |
Economic and Distributional Impacts of Free Trade Agreements : The Case of Indonesia |
| title_sort |
economic and distributional impacts of free trade agreements : the case of indonesia |
| publisher |
World Bank, Washington, DC |
| publishDate |
2019 |
| url |
http://documents.worldbank.org/curated/en/926241569328187590/Economic-and-Distributional-Impacts-of-Free-Trade-Agreements-The-Case-of-Indonesia http://hdl.handle.net/10986/32450 |
| _version_ |
1764476571105624064 |