Trade Policy and Poverty Reduction in Brazil
UCF Economics Working Paper No. 03-13
51 Pages Posted: 18 Apr 2005
Date Written: 2003
Abstract
Using a multi-region CGE model, we evaluate the regional, multilateral and unilateral trade policy options of MERCOSUR from the perspective of the welfare of all potential partners. In Brazil, we focus on poverty impacts. We find that the poorest households in Brazil experience percentage gains of between 1.5 to 5.5 percent of their consumption, which is about three to four times the average for Brazil. Protection in Brazil favors capital intensive manufacturing relative to unskilled labor intensive agriculture and manufacturing. So trade liberalization raises the return to unskilled labor relative to capital, thereby helping the poor.
Keywords: Poverty, development, trade policy, free trade agreement of the Americas
JEL Classification: F15, F17, F13, F14
Suggested Citation: Suggested Citation
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