Is MERCOSUR's External Agenda Pro-Poor? An Assessment of the European Union-MERCOSUR Free-Trade Agreement on Poverty in Uruguay Applying MIRAGE
In: IFPRI Discussion Paper 01219
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In: IFPRI Discussion Paper 01219
SSRN
Working paper
In 2010, after several years of being stalled, negotiations between MERCOSUR (the Common Market of the Southern Cone) and the European Union (EU) to build a free-trade agreement (FTA) were resumed. This FTA is expected to have an important impact on MERCOSUR economies, especially if both blocs reach an agreement regarding the agricultural sector. This paper analyzes the impact of an FTA between MERCOSUR and EU, with a special focus on distributional impacts on Uruguay. For this we apply an improved version of MIRAGE (Modeling International Relationships in Applied General Equilibrium) with household heterogeneity. The representative agent in the standard version of the MIRAGE model is decomposed into a private and a public agent for all regions, and into a high number of households for Uruguay. Results show that a trade agreement between MERCOSUR and EU would have a significant impact on trade flows between both blocs. MERCOSUR economies would increase agriculture exports to EU and industrial imports from EU. Welfare increases in all countries participating in the agreement but is more pronounced for the two small countries of MERCOSUR: Paraguay and Uruguay. In Uruguay, welfare increases for different categories of households, but the richest households benefit the most. In spite of this, inequality decreases as a consequence of the agreement, and poverty rates decrease throughout the country. ; Non-PR ; IFPRI1; Theme 2; Subtheme 2.1; GRP2 ; MTID
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In: Revista uruguaya de ciencia política, Band 15, S. 107-128
ISSN: 1688-499X
In: The developing economies: the journal of the Institute of Developing Economies, Tokyo, Japan, Band 51, Heft 3, S. 233-259
ISSN: 1746-1049
The 2008 global economic crisis affected the Uruguayan economy through two main channels: collapse in global trade and drop in capital flows. In response to the crisis, the Uruguayan government increased public consumption and investment and expanded social benefits to unemployed workers. We apply a computable general equilibrium model linked to microsimulations to analyze the distributional impacts of these policies and assess their effectiveness. We find that an increase in public investment was the only policy effective in mitigating the negative impact of the crisis on extreme poverty. The other policies reinforced the negative impact of the crisis on the poor. All three policies are costly and have an important impact on macroeconomic variables and the structure of production and export, while they have only slight or negative results on poverty and household income. More focalized policies, such as direct cash transfers, might have better results in terms of cost‐benefit.
In: Latin American journal of economics: LAJE ; an open access research journal ; formerly Cuadernos de economía, Band 48, Heft 1, S. 1-37
ISSN: 0719-0433
In: American Journal of Agricultural Economics, Band 96, Heft 3, S. 924-938
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In: IFPRI Discussion Paper 01241
SSRN
Working paper
This paper studies the implementation of Differential Export Tax (DET) rates along value chains, in particular in the oilseeds chain (seeds/vegetable oils/biodiesel): this trade policy consists in relatively high export taxes on raw commodities and relatively low taxes on processed goods. This policy may generate public revenues and benefit final consumption by lowering domestic prices of vegetable oils and biodiesel, and also promotes production at more processed stages of transformation, particularly in response to tariff escalation by importing partners. We first study the theoretical justification of this trade policy with a simple international trade model. It shows how implementing a tax on exports of raw agricultural commodity in a country exporting seeds and vegetable oils, augments the sum of profits and final consumers' surplus in the processing sector, of farmers' surplus, and of public revenues. Then we develop a world partial equilibrium model of the oilseed value chain that illustrates these theoretical conclusions. We simulate: (i) the elimination of DETs in Argentina, Indonesia and Ukraine; (ii) the elimination of import tariffs applied by the EU and the US on the same goods; (iii) the elimination of DETs in Argentina, Indonesia and Ukraine and of import tariffs applied by the EU and the US. According to our estimates, both consumers and producers throughout the world benefit from the removal of export taxes in these value chains, respectively 931 million USD and 2.2 billion USD. The third scenario leads to a significant expansion of world production of all activities along the value chain, including the production of biodiesel for which world output would expand by one percent.
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This research has been undertaken to understand the rationale for the implementation of decreasing export taxes along the value chain in middle-income countries, in particular in the oilseeds value chain. This paper studies the implementation of Differential Export Tax (DET) rates along value chains, in particular in the oilseeds chain (seeds/vegetable oils/biodiesel); this trade policy consists of relatively high export taxes on raw commodities and relatively low taxes on processed goods. This policy may generate public revenues and benefit final consumption by lowering domestic prices of vegetable oils and biodiesel and also promotes production at more processed stages of transformation, particularly in response to tariff escalation by importing partners. The authors first study the theoretical justification of this trade policy with a simple international trade model. It shows how implementing a tax on exports of raw agricultural commodity in a country exporting seeds and vegetable oils augments the sum of profits and final consumers' surplus in the processing sector, of farmers' surplus, and of public revenues. Then the authors develop a world partial equilibrium model of the oilseed value chain that illustrates these theoretical conclusions. They simulate (1) the elimination of DETs in Argentina, Indonesia, and Ukraine; (2) the elimination of import tariffs applied by the European Union (EU) and the United States on the same goods; and (3) the elimination of DETs in Argentina, Indonesia, and Ukraine and of import tariffs applied by the EU and the United States. According to the authors' estimates, both consumers and producers throughout the world benefit from the removal of export taxes in these value chains: US$931 million and US$2.2 billion, respectively. The third scenario leads to a significant expansion of world production of all activities along the value chain, including the production of biodiesel for which world output would expand by 1 percent. ; Non-PR ; IFPRI1 ; MTID
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In: PEP working paper serie 2008-16
SSRN
Working paper
In: NBER Working Paper No. w24894
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In: Journal of policy modeling: JPMOD ; a social science forum of world issues, Band 34, Heft 2, S. 193-210
ISSN: 0161-8938
In: Journal of policy modeling: JPMOD ; a social science forum of world issues, Band 34, Heft 2, S. 193-211
ISSN: 0161-8938
In: Modeling Public Policies in Latin America and the Caribbean; ECLAC Books, S. 175-197
In: Latin American journal of economics: LAJE ; an open access research journal ; formerly Cuadernos de economía, Band 48, Heft 1, S. 1-37
ISSN: 0719-0433