Liberalizing Trade, and Its Impact on Poverty and Inequality in Nicaragua
The Doha round of multilateral trade negotiations stalled in 2008 owing in no small degree to a lack of agreement on the terms of substantially reducing trade-distorting support for agricultural products and to what extent this will be beneficial t...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/282841468110038167/Liberalizing-trade-and-its-impact-on-poverty-and-inequality-in-Nicaragua http://hdl.handle.net/10986/28145 |
| Summary: | The Doha round of multilateral trade
negotiations stalled in 2008 owing in no small degree to a
lack of agreement on the terms of substantially reducing
trade-distorting support for agricultural products and to
what extent this will be beneficial to developing countries.
Nicaragua presents an interesting case in point, being one
of the poorest economies in Latin America with still a
relatively large agricultural sector and high degrees of
rural poverty. In 2005, the country signed a free trade
agreement with the United States. This chapter provides a
quantitative analysis addressing that question. It does so
using a computable general equilibrium (CGE) model for
Nicaragua coupled with a micro-simulation methodology. The
first section provides background information on trade
reform policies and macroeconomic trends in Nicaragua, with
special reference to the agricultural sector and rural
poverty. The section that follows describes the main
features of the CGE model and the micro-simulation
methodology used to assess the impact on poverty and
inequality. The author then lay out the model scenarios
considered, which include liberalizations of agricultural
and all merchandise goods trade by the rest of the world and
by Nicaragua itself. That is followed by a summary analysis
of results. This analysis includes tests for the sensitivity
of the results with respect to assumptions regarding the
responsiveness of trade to price liberalization, as
identified through the relevant trade elasticities. The
final section provides conclusions and possible policy implications. |
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