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GTAP Resources: Resource Display

GTAP Resource #3227

"Human Capital Formation and the Linkage between Trade and Poverty: The Cases of Costa Rica and Nicaragua"
by Rivera, Luis and Hugo Rojas-Romagosa

We combine different analytical instruments to assess the impact of human capital and trade policies on macroeconomic aggregates and poverty, and how both sets of policies complement each other in Costa Rica and Nicaragua. We use a top-down approach --i.e. a dynamic CGE model and microsimulation-- to assess the effects of two FTAs: DR-CAFTA and EU-CAAA on production and poverty. Moreover, we use a human capital satellite model to evaluate the impact of human capital formation. Combining the satellite model with the CGE model and the microsimulations, we construct a rich analytical framework to assess the direct effect of each set of policies on poverty and how these policies complement each other. We find that human capital policies have a significant and permanent effect on growth and this is associated with poverty reductions. On the other hand, the static efficiency changes associated with trade liberalization have positive but small growth and poverty effects.
The main objective of this study is to estimate the impact of trade and human capital formation on poverty, and assess the complementarities between both sets of policies. To achieve this goal we use several methodologies. First, we build a dynamic Computable General Equilibrium (CGE) model and use it to analyze the macroeconomic effects of two FTAs (DR-CAFTA and EU-CAAA). Secondly, using a top-down approach, we assess the microeconomic effects on households when the macro policies are implemented. Finally, we implement a human capital satellite model and use it to assess the effects of human capital policies on labor efficiency and labor supply by different skill types. We then interlink the satellite model with the CGE model to interact trade and human capital policies at the macro level. The combination of these methodologies enables us to conduct a rich analysis of each policy (education and trade), their interactions and complementarities.

Resource Details (Export Citation) GTAP Keywords
Category: 2010 Conference Paper
Status: Published
By/In: Presented at the 13th Annual Conference on Global Economic Analysis, Penang, Malaysia
Date: 2009
Version: Final Report
Created: Rojas-Romagosa, H. (4/8/2010)
Updated: Rojas-Romagosa, H. (4/8/2010)
Visits: 2,231
- Preferential trading arrangements
- Trade in textiles and wearing apparel
- Domestic policy analysis
- Economic growth
- Economic development
- Economic analysis of poverty
- Dynamic modeling
- Central America

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