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, w...

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Main Authors:	Bussolo, Maurizio, Niimi, Yoko
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ACCESS TO SERVICE MARKETS ADJUSTMENT PROCESS AGGREGATE INCOME AGRICULTURAL COMMODITIES AGRICULTURAL PRODUCTS AGRICULTURE APPAREL AUTONOMY BALANCE OF PAYMENTS BENCHMARK BENCHMARK EQUILIBRIUM CAPITAL ACCUMULATION CAPITAL GOODS CAPITAL INFLOWS CAPITAL INPUTS CENTRAL AMERICA CENTRAL AMERICAN COMMERCE CONCESSIONS CONSTANT ELASTICITY CONSTANT ELASTICITY OF SUBSTITUTION CONSTANT ELASTICITY OF TRANSFORMATION CONSUMER CONSUMPTION PATTERNS CURRENT ACCOUNT DEPENDENT VARIABLE DEVELOPING COUNTRIES DISTRIBUTIONAL EFFECTS DIVIDENDS DOMESTIC DEMAND DOMESTIC MARKET DOMESTIC PRODUCTION ECONOMIC STRUCTURE ELASTICITY ELASTICITY OF SUBSTITUTION EMPIRICAL EVIDENCE ENDOGENOUS VARIABLES EQUILIBRIUM EXPENDITURE EXPLANATORY VARIABLES EXPORT ORIENTATION EXPORT SECTORS EXPORT SUPPLY EXPORTS FACTOR ACCUMULATION FACTOR CONTRIBUTIONS FACTOR ENDOWMENTS FACTOR INCOME FACTOR MARKETS FACTOR PRICE FACTOR PRICES FACTORS OF PRODUCTION FOOD CONSUMPTION FOREIGN DIRECT INVESTMENT FOREIGN MARKETS FOREIGN PRODUCTION FREE ACCESS FREE TRADE FREE TRADE AREA FULL LIBERALIZATION FUNCTIONAL FORMS GENERAL EQUILIBRIUM MODEL GEOGRAPHICAL VARIABLES GOVERNMENT EXPENDITURES GROWTH COMPONENT GROWTH RATES HOUSEHOLD INCOME HOUSEHOLD INCOMES HOUSEHOLD MEMBERS HOUSEHOLD SURVEYS HUMAN CAPITAL IMPACT OF TRADE IMPACT OF TRADE REFORMS IMPORT IMPORT PROTECTION IMPORTS INCOME INCOME COMPONENTS INCOME DISTRIBUTION INCOME GROUPS INCOME LEVEL INCOME LEVELS INCOME SOURCES INCOMES INDIVIDUAL INCOMES INTERNATIONAL TRADE LABOR MARKET LABOR MARKET SEGMENTATION LABOR MARKETS LIVING STANDARDS MARKET IMPERFECTIONS MARKET PRICES MARKET REFORMS MARKET SEGMENTATION METAL PRODUCTS NEGATIVE EXTERNALITIES NEGATIVE SHOCK NEGATIVE SIGN POLICY REFORM POLICY REFORMS POLICY RESEARCH POOR HOUSEHOLDS POOR PEOPLE POSITIVE EXTERNALITIES POVERTY IMPACT POVERTY REDUCTIONS PREFERENTIAL MARKET ACCESS PRICE CHANGES PRICE DECREASES PRICE INCENTIVES PRIMARY FACTORS PRIVATE CONSUMPTION PRODUCTIVE ASSETS REAL EXCHANGE RATE REAL EXCHANGE RATES REAL INCOME REGIONAL TRADE REGIONAL TRADE PACTS REGRESSION ANALYSIS RELATIVE CHANGE RELATIVE IMPORTANCE RELATIVE PRICES RESOURCE ALLOCATION RULES OF ORIGIN SALES SENSITIVITY ANALYSIS SKILLED WORKERS SOUTH AMERICA SUBSTITUTES SURPLUS TARIFF DATA TARIFF RATES TARIFF REDUCTIONS TARIFF REVENUE TOTAL CONSUMPTION TOTAL OUTPUT TRADE AGREEMENT TRADE AGREEMENTS TRADE LIBERALIZATION TRADE PARTNERS TRADE POLICY TRADE REFORM TRADE REFORMS TRADE SHOCKS UNILATERAL LIBERALIZATION UNILATERAL TRADE UNILATERAL TRADE LIBERALIZATION UNSKILLED LABOR UTILITY FUNCTION VALUE ADDED WAGE DIFFERENTIALS WAGE RATE WAGES WORLD PRICES WTO
Online Access:	http://documents.worldbank.org/curated/en/2006/02/6600539/regional-trade-pacts-benefit-poor-illustration-dominican-republic-central-american-free-trade-agreement-nicaragua http://hdl.handle.net/10986/8743

id	okr-10986-8743
recordtype	oai_dc
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	ACCESS TO SERVICE MARKETS ADJUSTMENT PROCESS AGGREGATE INCOME AGRICULTURAL COMMODITIES AGRICULTURAL PRODUCTS AGRICULTURE APPAREL AUTONOMY BALANCE OF PAYMENTS BENCHMARK BENCHMARK EQUILIBRIUM CAPITAL ACCUMULATION CAPITAL GOODS CAPITAL INFLOWS CAPITAL INPUTS CENTRAL AMERICA CENTRAL AMERICAN COMMERCE CONCESSIONS CONSTANT ELASTICITY CONSTANT ELASTICITY OF SUBSTITUTION CONSTANT ELASTICITY OF TRANSFORMATION CONSUMER CONSUMPTION PATTERNS CURRENT ACCOUNT DEPENDENT VARIABLE DEVELOPING COUNTRIES DISTRIBUTIONAL EFFECTS DIVIDENDS DOMESTIC DEMAND DOMESTIC MARKET DOMESTIC PRODUCTION ECONOMIC STRUCTURE ELASTICITY ELASTICITY OF SUBSTITUTION EMPIRICAL EVIDENCE ENDOGENOUS VARIABLES EQUILIBRIUM EXPENDITURE EXPLANATORY VARIABLES EXPORT ORIENTATION EXPORT SECTORS EXPORT SUPPLY EXPORTS FACTOR ACCUMULATION FACTOR CONTRIBUTIONS FACTOR ENDOWMENTS FACTOR INCOME FACTOR MARKETS FACTOR PRICE FACTOR PRICES FACTORS OF PRODUCTION FOOD CONSUMPTION FOREIGN DIRECT INVESTMENT FOREIGN MARKETS FOREIGN PRODUCTION FREE ACCESS FREE TRADE FREE TRADE AREA FULL LIBERALIZATION FUNCTIONAL FORMS GENERAL EQUILIBRIUM MODEL GEOGRAPHICAL VARIABLES GOVERNMENT EXPENDITURES GROWTH COMPONENT GROWTH RATES HOUSEHOLD INCOME HOUSEHOLD INCOMES HOUSEHOLD MEMBERS HOUSEHOLD SURVEYS HUMAN CAPITAL IMPACT OF TRADE IMPACT OF TRADE REFORMS IMPORT IMPORT PROTECTION IMPORTS INCOME INCOME COMPONENTS INCOME DISTRIBUTION INCOME GROUPS INCOME LEVEL INCOME LEVELS INCOME SOURCES INCOMES INDIVIDUAL INCOMES INTERNATIONAL TRADE LABOR MARKET LABOR MARKET SEGMENTATION LABOR MARKETS LIVING STANDARDS MARKET IMPERFECTIONS MARKET PRICES MARKET REFORMS MARKET SEGMENTATION METAL PRODUCTS NEGATIVE EXTERNALITIES NEGATIVE SHOCK NEGATIVE SIGN POLICY REFORM POLICY REFORMS POLICY RESEARCH POOR HOUSEHOLDS POOR PEOPLE POSITIVE EXTERNALITIES POVERTY IMPACT POVERTY REDUCTIONS PREFERENTIAL MARKET ACCESS PRICE CHANGES PRICE DECREASES PRICE INCENTIVES PRIMARY FACTORS PRIVATE CONSUMPTION PRODUCTIVE ASSETS REAL EXCHANGE RATE REAL EXCHANGE RATES REAL INCOME REGIONAL TRADE REGIONAL TRADE PACTS REGRESSION ANALYSIS RELATIVE CHANGE RELATIVE IMPORTANCE RELATIVE PRICES RESOURCE ALLOCATION RULES OF ORIGIN SALES SENSITIVITY ANALYSIS SKILLED WORKERS SOUTH AMERICA SUBSTITUTES SURPLUS TARIFF DATA TARIFF RATES TARIFF REDUCTIONS TARIFF REVENUE TOTAL CONSUMPTION TOTAL OUTPUT TRADE AGREEMENT TRADE AGREEMENTS TRADE LIBERALIZATION TRADE PARTNERS TRADE POLICY TRADE REFORM TRADE REFORMS TRADE SHOCKS UNILATERAL LIBERALIZATION UNILATERAL TRADE UNILATERAL TRADE LIBERALIZATION UNSKILLED LABOR UTILITY FUNCTION VALUE ADDED WAGE DIFFERENTIALS WAGE RATE WAGES WORLD PRICES WTO
spellingShingle	ACCESS TO SERVICE MARKETS ADJUSTMENT PROCESS AGGREGATE INCOME AGRICULTURAL COMMODITIES AGRICULTURAL PRODUCTS AGRICULTURE APPAREL AUTONOMY BALANCE OF PAYMENTS BENCHMARK BENCHMARK EQUILIBRIUM CAPITAL ACCUMULATION CAPITAL GOODS CAPITAL INFLOWS CAPITAL INPUTS CENTRAL AMERICA CENTRAL AMERICAN COMMERCE CONCESSIONS CONSTANT ELASTICITY CONSTANT ELASTICITY OF SUBSTITUTION CONSTANT ELASTICITY OF TRANSFORMATION CONSUMER CONSUMPTION PATTERNS CURRENT ACCOUNT DEPENDENT VARIABLE DEVELOPING COUNTRIES DISTRIBUTIONAL EFFECTS DIVIDENDS DOMESTIC DEMAND DOMESTIC MARKET DOMESTIC PRODUCTION ECONOMIC STRUCTURE ELASTICITY ELASTICITY OF SUBSTITUTION EMPIRICAL EVIDENCE ENDOGENOUS VARIABLES EQUILIBRIUM EXPENDITURE EXPLANATORY VARIABLES EXPORT ORIENTATION EXPORT SECTORS EXPORT SUPPLY EXPORTS FACTOR ACCUMULATION FACTOR CONTRIBUTIONS FACTOR ENDOWMENTS FACTOR INCOME FACTOR MARKETS FACTOR PRICE FACTOR PRICES FACTORS OF PRODUCTION FOOD CONSUMPTION FOREIGN DIRECT INVESTMENT FOREIGN MARKETS FOREIGN PRODUCTION FREE ACCESS FREE TRADE FREE TRADE AREA FULL LIBERALIZATION FUNCTIONAL FORMS GENERAL EQUILIBRIUM MODEL GEOGRAPHICAL VARIABLES GOVERNMENT EXPENDITURES GROWTH COMPONENT GROWTH RATES HOUSEHOLD INCOME HOUSEHOLD INCOMES HOUSEHOLD MEMBERS HOUSEHOLD SURVEYS HUMAN CAPITAL IMPACT OF TRADE IMPACT OF TRADE REFORMS IMPORT IMPORT PROTECTION IMPORTS INCOME INCOME COMPONENTS INCOME DISTRIBUTION INCOME GROUPS INCOME LEVEL INCOME LEVELS INCOME SOURCES INCOMES INDIVIDUAL INCOMES INTERNATIONAL TRADE LABOR MARKET LABOR MARKET SEGMENTATION LABOR MARKETS LIVING STANDARDS MARKET IMPERFECTIONS MARKET PRICES MARKET REFORMS MARKET SEGMENTATION METAL PRODUCTS NEGATIVE EXTERNALITIES NEGATIVE SHOCK NEGATIVE SIGN POLICY REFORM POLICY REFORMS POLICY RESEARCH POOR HOUSEHOLDS POOR PEOPLE POSITIVE EXTERNALITIES POVERTY IMPACT POVERTY REDUCTIONS PREFERENTIAL MARKET ACCESS PRICE CHANGES PRICE DECREASES PRICE INCENTIVES PRIMARY FACTORS PRIVATE CONSUMPTION PRODUCTIVE ASSETS REAL EXCHANGE RATE REAL EXCHANGE RATES REAL INCOME REGIONAL TRADE REGIONAL TRADE PACTS REGRESSION ANALYSIS RELATIVE CHANGE RELATIVE IMPORTANCE RELATIVE PRICES RESOURCE ALLOCATION RULES OF ORIGIN SALES SENSITIVITY ANALYSIS SKILLED WORKERS SOUTH AMERICA SUBSTITUTES SURPLUS TARIFF DATA TARIFF RATES TARIFF REDUCTIONS TARIFF REVENUE TOTAL CONSUMPTION TOTAL OUTPUT TRADE AGREEMENT TRADE AGREEMENTS TRADE LIBERALIZATION TRADE PARTNERS TRADE POLICY TRADE REFORM TRADE REFORMS TRADE SHOCKS UNILATERAL LIBERALIZATION UNILATERAL TRADE UNILATERAL TRADE LIBERALIZATION UNSKILLED LABOR UTILITY FUNCTION VALUE ADDED WAGE DIFFERENTIALS WAGE RATE WAGES WORLD PRICES WTO Bussolo, Maurizio Niimi, Yoko Do Regional Trade Pacts Benefit the Poor? An Illustration from the Dominican Republic-Central American Free Trade Agreement in Nicaragua
geographic_facet	Latin America & Caribbean Dominican Republic Nicaragua
relation	Policy Research Working Paper; No. 3850
description	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.
format	Publications & Research :: Policy Research Working Paper
author	Bussolo, Maurizio Niimi, Yoko
author_facet	Bussolo, Maurizio Niimi, Yoko
author_sort	Bussolo, Maurizio
title	Do Regional Trade Pacts Benefit the Poor? An Illustration from the Dominican Republic-Central American Free Trade Agreement in Nicaragua
title_short	Do Regional Trade Pacts Benefit the Poor? An Illustration from the Dominican Republic-Central American Free Trade Agreement in Nicaragua
title_full	Do Regional Trade Pacts Benefit the Poor? An Illustration from the Dominican Republic-Central American Free Trade Agreement in Nicaragua
title_fullStr	Do Regional Trade Pacts Benefit the Poor? An Illustration from the Dominican Republic-Central American Free Trade Agreement in Nicaragua
title_full_unstemmed	Do Regional Trade Pacts Benefit the Poor? An Illustration from the Dominican Republic-Central American Free Trade Agreement in Nicaragua
title_sort	do regional trade pacts benefit the poor? an illustration from the dominican republic-central american free trade agreement in nicaragua
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/2006/02/6600539/regional-trade-pacts-benefit-poor-illustration-dominican-republic-central-american-free-trade-agreement-nicaragua http://hdl.handle.net/10986/8743
_version_	1764405933188841472
spelling	okr-10986-87432021-04-23T14:02:40Z Do Regional Trade Pacts Benefit the Poor? An Illustration from the Dominican Republic-Central American Free Trade Agreement in Nicaragua Bussolo, Maurizio Niimi, Yoko ACCESS TO SERVICE MARKETS ADJUSTMENT PROCESS AGGREGATE INCOME AGRICULTURAL COMMODITIES AGRICULTURAL PRODUCTS AGRICULTURE APPAREL AUTONOMY BALANCE OF PAYMENTS BENCHMARK BENCHMARK EQUILIBRIUM CAPITAL ACCUMULATION CAPITAL GOODS CAPITAL INFLOWS CAPITAL INPUTS CENTRAL AMERICA CENTRAL AMERICAN COMMERCE CONCESSIONS CONSTANT ELASTICITY CONSTANT ELASTICITY OF SUBSTITUTION CONSTANT ELASTICITY OF TRANSFORMATION CONSUMER CONSUMPTION PATTERNS CURRENT ACCOUNT DEPENDENT VARIABLE DEVELOPING COUNTRIES DISTRIBUTIONAL EFFECTS DIVIDENDS DOMESTIC DEMAND DOMESTIC MARKET DOMESTIC PRODUCTION ECONOMIC STRUCTURE ELASTICITY ELASTICITY OF SUBSTITUTION EMPIRICAL EVIDENCE ENDOGENOUS VARIABLES EQUILIBRIUM EXPENDITURE EXPLANATORY VARIABLES EXPORT ORIENTATION EXPORT SECTORS EXPORT SUPPLY EXPORTS FACTOR ACCUMULATION FACTOR CONTRIBUTIONS FACTOR ENDOWMENTS FACTOR INCOME FACTOR MARKETS FACTOR PRICE FACTOR PRICES FACTORS OF PRODUCTION FOOD CONSUMPTION FOREIGN DIRECT INVESTMENT FOREIGN MARKETS FOREIGN PRODUCTION FREE ACCESS FREE TRADE FREE TRADE AREA FULL LIBERALIZATION FUNCTIONAL FORMS GENERAL EQUILIBRIUM MODEL GEOGRAPHICAL VARIABLES GOVERNMENT EXPENDITURES GROWTH COMPONENT GROWTH RATES HOUSEHOLD INCOME HOUSEHOLD INCOMES HOUSEHOLD MEMBERS HOUSEHOLD SURVEYS HUMAN CAPITAL IMPACT OF TRADE IMPACT OF TRADE REFORMS IMPORT IMPORT PROTECTION IMPORTS INCOME INCOME COMPONENTS INCOME DISTRIBUTION INCOME GROUPS INCOME LEVEL INCOME LEVELS INCOME SOURCES INCOMES INDIVIDUAL INCOMES INTERNATIONAL TRADE LABOR MARKET LABOR MARKET SEGMENTATION LABOR MARKETS LIVING STANDARDS MARKET IMPERFECTIONS MARKET PRICES MARKET REFORMS MARKET SEGMENTATION METAL PRODUCTS NEGATIVE EXTERNALITIES NEGATIVE SHOCK NEGATIVE SIGN POLICY REFORM POLICY REFORMS POLICY RESEARCH POOR HOUSEHOLDS POOR PEOPLE POSITIVE EXTERNALITIES POVERTY IMPACT POVERTY REDUCTIONS PREFERENTIAL MARKET ACCESS PRICE CHANGES PRICE DECREASES PRICE INCENTIVES PRIMARY FACTORS PRIVATE CONSUMPTION PRODUCTIVE ASSETS REAL EXCHANGE RATE REAL EXCHANGE RATES REAL INCOME REGIONAL TRADE REGIONAL TRADE PACTS REGRESSION ANALYSIS RELATIVE CHANGE RELATIVE IMPORTANCE RELATIVE PRICES RESOURCE ALLOCATION RULES OF ORIGIN SALES SENSITIVITY ANALYSIS SKILLED WORKERS SOUTH AMERICA SUBSTITUTES SURPLUS TARIFF DATA TARIFF RATES TARIFF REDUCTIONS TARIFF REVENUE TOTAL CONSUMPTION TOTAL OUTPUT TRADE AGREEMENT TRADE AGREEMENTS TRADE LIBERALIZATION TRADE PARTNERS TRADE POLICY TRADE REFORM TRADE REFORMS TRADE SHOCKS UNILATERAL LIBERALIZATION UNILATERAL TRADE UNILATERAL TRADE LIBERALIZATION UNSKILLED LABOR UTILITY FUNCTION VALUE ADDED WAGE DIFFERENTIALS WAGE RATE WAGES WORLD PRICES WTO 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. 2012-06-21T22:35:59Z 2012-06-21T22:35:59Z 2006-02 http://documents.worldbank.org/curated/en/2006/02/6600539/regional-trade-pacts-benefit-poor-illustration-dominican-republic-central-american-free-trade-agreement-nicaragua http://hdl.handle.net/10986/8743 English Policy Research Working Paper; No. 3850 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Latin America & Caribbean Dominican Republic Nicaragua

Do Regional Trade Pacts Benefit the Poor? An Illustration from the Dominican Republic-Central American Free Trade Agreement in Nicaragua

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