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GTAP Resources: Resource Display

GTAP Resource #1697

"Structural Change and Poverty Reduction in Brazil: The Impact of the Doha Round"
by Bussolo, Maurizio, Jann Lay and Dominique van der Mensbrugghe

For the Brazilian case, this paper intends to evaluate the poverty effects of trade liberalization in the medium run. In doing so, we focus on the labor market, as we consider this transmission channel to be of overriding importance in this time horizon. This implies to assess the poverty impact of a Doha Round (and a Full Liberalization) counterfactual scenario against a scenario that incorporates some of the main features of medium run structural change. We will thus examine whether the effects of trade liberalization, in particular on poverty and the distribution of income, are still prominent in the medium run.
The features incorporated in our simulation exercise are changes in different sources of factor income, changes in the sectoral composition of the workforce, and educational upgrading of the workforce. These changes are driven by changing consumption patterns, purely exogenous factors (at least in our model), such as differentials in productivity growth rates across sectors and differential growth rates for different types of labor, and, finally, the trade shocks. The methodology used here combines a dynamic computable general equilibrium model with a microsimulation model for Brazil. For a time horizon of 15 years, a business as usual scenario and two trade counterfactuals are developed in the CGE model and crucial aggregate results on relative factor prices and resource movements from agricultural to non-agricultural sectors are linked to a microsimulation. This macro-micro model enables us to analyze the long-term poverty and distributional impact of different growth patterns.
Our analysis suggests that the economic effects of the Doha round, even of an “optimistic deep” liberalization scenario, are rather limited for Brazil. Accordingly, poverty would remain largely unaffected by this trade reform, which does not appear to be biased in favor any of particularly poor groups. Yet, through a slight improvement in the urban income distribution the Doha scenario has some positive effect on poverty.
In contrast, a full liberalization scenario implies quite substantial welfare gains that are concentrated among some of the poorest groups of the country, in particular those in agriculture.

Resource Details (Export Citation) GTAP Keywords
Category: GTAP Application
2005 Conference Paper
Status: Published
By/In: Presented at the 8th Annual Conference on Global Economic Analysis, Lübeck, Germany
Date: 2005
Created: Lay, J. (4/27/2005)
Updated: Batta, G. (6/21/2005)
Visits: 2,675
No keywords have been specified.

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