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GTAP Resource #3640

"Is MERCOSUR external agenda pro-poor? An assessment of the EU-MERCOSUR free trade agreement on Uruguayan poverty applying MIRAGE"
by Bouët, Antoine, Carmen Estrades and David Laborde

In 2010, after several years of being stalled, negotiations between MERCOSUR and the European Union to conform a Free Trade Agreement (FTA) were resumed. According to official sources, there is optimism that this time negotiations will conclude in the medium term. This FTA is expected to have an important impact on MERCOSUR economies, especially if both blocs reach an agreement regarding the agriculture sector. For a small country as Uruguay, one of the small economies of MERCOSUR, this agreement may have an important impact on the economy, and also on income distribution and poverty, as the FTA will have differentiated impact on the different sectors of the economy.
This paper analyzes the impact of a FTA between MERCOSUR and EU on Uruguay, making special focus on the impact on poverty. For doing so, we apply an improved version of MIRAGE with household heterogeneity. The original representative private agent of the MIRAGE model is now split into a public agent and a maximum of 439 households in the case of Uruguay. This split is made with data from a recent household survey, applying a clustering method. Households are characterized by social and economic attributes, such as skill level and gender of the household head, main income source and location.
This exercise will allow us to first analyze how the gains of the FTA are distributed among the MERCOSUR members, and also explore how the gains for one country (Uruguay) are distributed among its population, to identify potential winners and losers from the agreement, and to understand the different reactions of the households. Finally, gains and losses of the public agent will also be analyzed.

Resource Details (Export Citation) GTAP Keywords
Category: 2011 Conference Paper
Status: Published
By/In: Presented at the 14th Annual Conference on Global Economic Analysis, Venice, Italy
Date: 2011
Created: Estrades, C. (4/15/2011)
Updated: Estrades, C. (4/15/2011)
Visits: 2,352
- Preferential trading arrangements
- Economic analysis of poverty
- European Union
- South America

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