Preferential Liberalization and Its Economy-Wide Effects in Honduras
This paper quantifies the likely benefits of trade and investment liberalization in a small, poor, open economy, using the accession of Honduras to the Dominican Republic-Central American Free Trade Agreement as a case study. The results show that...
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| Format: | Policy Research Working Paper |
| Language: | English |
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World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2008/02/9039020/preferential-liberalization-economy-wide-effects-honduras http://hdl.handle.net/10986/6574 |
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okr-10986-6574 |
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oai_dc |
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Digital Repository |
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Foreign Institution |
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Digital Repositories |
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World Bank Open Knowledge Repository |
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World Bank |
| language |
English |
| topic |
ADVERSE CONSEQUENCES ADVERSE EFFECTS AGGREGATE INVESTMENT AGRICULTURAL COMMODITIES AGRICULTURAL PRODUCTS AGRICULTURE ANNUAL GROWTH APPAREL AVERAGE TARIFF AVERAGE TARIFFS BALANCE OF PAYMENT BALANCE OF PAYMENTS BALANCE OF PAYMENTS CONSTRAINT BASE YEAR BENCHMARK BILATERAL AGREEMENT BILATERAL TRADE CAPACITY BUILDING CAPITAL ACCUMULATION CAPITAL FORMATION CAPITAL INCOME CAPITAL INFLOWS CAPITAL STOCK CAPITAL STOCKS CENTRAL BANK COMMODITY PRICE COMMON MARKET COMPARATIVE ADVANTAGE CONCESSIONS CONSTANT ELASTICITY OF SUBSTITUTION CONSTANT ELASTICITY OF TRANSFORMATION CONSTANT RETURNS TO SCALE CONSUMER PREFERENCES CONSUMER SURPLUS CONSUMERS CONSUMPTION BASKET CONSUMPTION LEVELS CURRENT ACCOUNT CURRENT ACCOUNT BALANCE DEBT DEBT SERVICE DEMAND CURVE DEMAND GROWTH DEMAND SHOCKS DEPENDENT VARIABLE DISPOSABLE INCOME DISPOSABLE INCOMES DISPUTE SETTLEMENT DOMESTIC CONSUMPTION DOMESTIC DEMAND DOMESTIC GOODS DOMESTIC PRICE DOMESTIC PRICES DOMESTIC PRODUCERS ECONOMIC IMPLICATIONS ELASTICITY ELASTICITY OF SUBSTITUTION EQUILIBRIA EXPANSION OF EXPORTS EXPENDITURE FUNCTION EXPORT GROWTH EXPORT MARKETS EXPORT ORIENTATION EXPORT PRICES EXPORT SHARES EXPORT SUPPLY EXPORT VOLUME EXPORT VOLUMES EXPORTER EXPORTERS EXPORTS EXTERNAL DEBT EXTERNAL PROTECTION FACTOR MARKETS FISCAL DEFICIT FOOD PRICES FORECASTS FOREIGN CAPITAL FOREIGN DEBT FOREIGN DIRECT INVESTMENT FREE ACCESS FREE TRADE FREE TRADE AGREEMENT FULL LIBERALIZATION FULL TRADE LIBERALIZATION GDP GDP PER CAPITA GENERAL EQUILIBRIUM GENERALIZED SYSTEM OF PREFERENCES GLOBAL DEMAND GLOBAL MARKET GLOBAL MARKETS GNP GOVERNMENT BONDS GROWTH PERFORMANCE GROWTH PROJECTIONS GROWTH RATE GROWTH RATES IMBALANCES IMPERFECT COMPETITION IMPORT IMPORT COMPETITION IMPORT CONTENT IMPORT DEMAND IMPORT PRICES IMPORT QUOTAS IMPORT TARIFFS IMPORTS INCOME INCOME ELASTICITIES INCOME ELASTICITY INCOME ELASTICITY OF DEMAND INCOME GROWTH INCREASING RETURNS INCREASING RETURNS TO SCALE INTERMEDIATE GOODS INTERMEDIATE INPUTS INTERNATIONAL CAPITAL FLOWS INTERNATIONAL FINANCIAL STATISTICS INTERNATIONAL TRADE INVENTORIES INVESTMENT CLIMATE INVESTMENT DEMAND INVESTMENT GOODS INVESTMENT INFLOWS INVESTMENT LIBERALIZATION INVESTMENT SPENDING LABOR FORCE LABOR MARKET LABOR MARKET SEGMENTATION LABOR MARKETS LIBERALIZATION OF TRADE LOST TARIFF REVENUE LOW TARIFF MACROECONOMIC EFFECTS MACROECONOMIC VARIABLES MARGINAL PROPENSITY TO SAVE MARKET ACCESS MARKET SHARE MONOPOLISTIC COMPETITION MULTILATERAL LIBERALIZATION MULTILATERAL TRADE NATURAL RESOURCES NEOCLASSICAL MODELS OPEN ECONOMY OPTIMIZATION PREFERENTIAL TRADE PRICE FLUCTUATIONS PRICE INDEX PRIVATE CAPITAL PRIVATE CONSUMPTION PRIVATE INVESTMENT PRODUCTIVITY PRODUCTIVITY GROWTH PROTECTION DATA PUBLIC DEBT PUBLIC EXPENDITURE PUBLIC INVESTMENT PUBLIC SPENDING RATE OF GROWTH REAL EXCHANGE RATE REAL GDP REGULATORY FRAMEWORKS RELATIVE PRICE RELATIVE PRICES REMITTANCE REMITTANCES SAFETY NETS SHORTFALL SUPPLY SIDE TARIFF BARRIERS TARIFF DATA TARIFF RATE TARIFF RATES TARIFF REDUCTION TARIFF REDUCTIONS TARIFF REVENUES TARIFFS ON IMPORTS TECHNICAL ASSISTANCE TEXTILE TARIFF TOTAL DEBT TOTAL EXPORTS TOTAL FACTOR PRODUCTIVITY TOTAL IMPORTS TOTAL INVESTMENT TOTAL OUTPUT TRADE BARRIERS TRADE DIVERSION TRADE FACILITATION TRADE LIBERALIZATION TRADE POLICY TRADE REFORM TRADING PARTNER TRADING PARTNERS TRANSITION MATRIX UNCERTAINTIES UNCERTAINTY UNEMPLOYMENT UNEMPLOYMENT RATE UNILATERAL LIBERALIZATION UNSKILLED LABOR UNSKILLED WORKERS URUGUAY ROUND UTILITY FUNCTION UTILITY FUNCTIONS VALUE ADDED WAGE DIFFERENTIALS WAGES WEIGHTS WELFARE GAINS WORLD MARKET WORLD PRICE WORLD PRICES WTO ZERO TARIFF |
| spellingShingle |
ADVERSE CONSEQUENCES ADVERSE EFFECTS AGGREGATE INVESTMENT AGRICULTURAL COMMODITIES AGRICULTURAL PRODUCTS AGRICULTURE ANNUAL GROWTH APPAREL AVERAGE TARIFF AVERAGE TARIFFS BALANCE OF PAYMENT BALANCE OF PAYMENTS BALANCE OF PAYMENTS CONSTRAINT BASE YEAR BENCHMARK BILATERAL AGREEMENT BILATERAL TRADE CAPACITY BUILDING CAPITAL ACCUMULATION CAPITAL FORMATION CAPITAL INCOME CAPITAL INFLOWS CAPITAL STOCK CAPITAL STOCKS CENTRAL BANK COMMODITY PRICE COMMON MARKET COMPARATIVE ADVANTAGE CONCESSIONS CONSTANT ELASTICITY OF SUBSTITUTION CONSTANT ELASTICITY OF TRANSFORMATION CONSTANT RETURNS TO SCALE CONSUMER PREFERENCES CONSUMER SURPLUS CONSUMERS CONSUMPTION BASKET CONSUMPTION LEVELS CURRENT ACCOUNT CURRENT ACCOUNT BALANCE DEBT DEBT SERVICE DEMAND CURVE DEMAND GROWTH DEMAND SHOCKS DEPENDENT VARIABLE DISPOSABLE INCOME DISPOSABLE INCOMES DISPUTE SETTLEMENT DOMESTIC CONSUMPTION DOMESTIC DEMAND DOMESTIC GOODS DOMESTIC PRICE DOMESTIC PRICES DOMESTIC PRODUCERS ECONOMIC IMPLICATIONS ELASTICITY ELASTICITY OF SUBSTITUTION EQUILIBRIA EXPANSION OF EXPORTS EXPENDITURE FUNCTION EXPORT GROWTH EXPORT MARKETS EXPORT ORIENTATION EXPORT PRICES EXPORT SHARES EXPORT SUPPLY EXPORT VOLUME EXPORT VOLUMES EXPORTER EXPORTERS EXPORTS EXTERNAL DEBT EXTERNAL PROTECTION FACTOR MARKETS FISCAL DEFICIT FOOD PRICES FORECASTS FOREIGN CAPITAL FOREIGN DEBT FOREIGN DIRECT INVESTMENT FREE ACCESS FREE TRADE FREE TRADE AGREEMENT FULL LIBERALIZATION FULL TRADE LIBERALIZATION GDP GDP PER CAPITA GENERAL EQUILIBRIUM GENERALIZED SYSTEM OF PREFERENCES GLOBAL DEMAND GLOBAL MARKET GLOBAL MARKETS GNP GOVERNMENT BONDS GROWTH PERFORMANCE GROWTH PROJECTIONS GROWTH RATE GROWTH RATES IMBALANCES IMPERFECT COMPETITION IMPORT IMPORT COMPETITION IMPORT CONTENT IMPORT DEMAND IMPORT PRICES IMPORT QUOTAS IMPORT TARIFFS IMPORTS INCOME INCOME ELASTICITIES INCOME ELASTICITY INCOME ELASTICITY OF DEMAND INCOME GROWTH INCREASING RETURNS INCREASING RETURNS TO SCALE INTERMEDIATE GOODS INTERMEDIATE INPUTS INTERNATIONAL CAPITAL FLOWS INTERNATIONAL FINANCIAL STATISTICS INTERNATIONAL TRADE INVENTORIES INVESTMENT CLIMATE INVESTMENT DEMAND INVESTMENT GOODS INVESTMENT INFLOWS INVESTMENT LIBERALIZATION INVESTMENT SPENDING LABOR FORCE LABOR MARKET LABOR MARKET SEGMENTATION LABOR MARKETS LIBERALIZATION OF TRADE LOST TARIFF REVENUE LOW TARIFF MACROECONOMIC EFFECTS MACROECONOMIC VARIABLES MARGINAL PROPENSITY TO SAVE MARKET ACCESS MARKET SHARE MONOPOLISTIC COMPETITION MULTILATERAL LIBERALIZATION MULTILATERAL TRADE NATURAL RESOURCES NEOCLASSICAL MODELS OPEN ECONOMY OPTIMIZATION PREFERENTIAL TRADE PRICE FLUCTUATIONS PRICE INDEX PRIVATE CAPITAL PRIVATE CONSUMPTION PRIVATE INVESTMENT PRODUCTIVITY PRODUCTIVITY GROWTH PROTECTION DATA PUBLIC DEBT PUBLIC EXPENDITURE PUBLIC INVESTMENT PUBLIC SPENDING RATE OF GROWTH REAL EXCHANGE RATE REAL GDP REGULATORY FRAMEWORKS RELATIVE PRICE RELATIVE PRICES REMITTANCE REMITTANCES SAFETY NETS SHORTFALL SUPPLY SIDE TARIFF BARRIERS TARIFF DATA TARIFF RATE TARIFF RATES TARIFF REDUCTION TARIFF REDUCTIONS TARIFF REVENUES TARIFFS ON IMPORTS TECHNICAL ASSISTANCE TEXTILE TARIFF TOTAL DEBT TOTAL EXPORTS TOTAL FACTOR PRODUCTIVITY TOTAL IMPORTS TOTAL INVESTMENT TOTAL OUTPUT TRADE BARRIERS TRADE DIVERSION TRADE FACILITATION TRADE LIBERALIZATION TRADE POLICY TRADE REFORM TRADING PARTNER TRADING PARTNERS TRANSITION MATRIX UNCERTAINTIES UNCERTAINTY UNEMPLOYMENT UNEMPLOYMENT RATE UNILATERAL LIBERALIZATION UNSKILLED LABOR UNSKILLED WORKERS URUGUAY ROUND UTILITY FUNCTION UTILITY FUNCTIONS VALUE ADDED WAGE DIFFERENTIALS WAGES WEIGHTS WELFARE GAINS WORLD MARKET WORLD PRICE WORLD PRICES WTO ZERO TARIFF Medvedev, Denis Preferential Liberalization and Its Economy-Wide Effects in Honduras |
| geographic_facet |
Latin America & Caribbean Honduras |
| relation |
Policy Research Working Paper; No. 4537 |
| description |
This paper quantifies the likely
benefits of trade and investment liberalization in a small,
poor, open economy, using the accession of Honduras to the
Dominican Republic-Central American Free Trade Agreement as
a case study. The results show that bilateral trade
liberalization with the United States is likely to have
almost no effect on welfare in Honduras, while the
reciprocal removal of protection vis-a-vis the rest of
Central America would lead to significantly larger gains.
Potential gains from increased net foreign direct investment
inflows overwhelm those expected from trade reform alone,
particularly if the new foreign direct investment generates
productivity spillovers. However, if it is to replace
Honduran investment rather than complement domestic capital
formation, growth performance is unlikely to improve and may
even suffer. The paper's results identify several areas
for policy attention by Honduran policy makers to make the
Dominican Republic-Central American Free Trade Agreement
more development-friendly. These include carefully
considering the budgetary implications of trade reform,
widening social safety nets to counter the trends toward
increasing income inequality, and sequencing the reforms to
ensure a close alignment of Honduras' comparative
advantage on the regional and global markets. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Medvedev, Denis |
| author_facet |
Medvedev, Denis |
| author_sort |
Medvedev, Denis |
| title |
Preferential Liberalization and Its Economy-Wide Effects in Honduras |
| title_short |
Preferential Liberalization and Its Economy-Wide Effects in Honduras |
| title_full |
Preferential Liberalization and Its Economy-Wide Effects in Honduras |
| title_fullStr |
Preferential Liberalization and Its Economy-Wide Effects in Honduras |
| title_full_unstemmed |
Preferential Liberalization and Its Economy-Wide Effects in Honduras |
| title_sort |
preferential liberalization and its economy-wide effects in honduras |
| publisher |
World Bank, Washington, DC |
| publishDate |
2012 |
| url |
http://documents.worldbank.org/curated/en/2008/02/9039020/preferential-liberalization-economy-wide-effects-honduras http://hdl.handle.net/10986/6574 |
| _version_ |
1764400544724549632 |
| spelling |
okr-10986-65742021-04-23T14:02:31Z Preferential Liberalization and Its Economy-Wide Effects in Honduras Medvedev, Denis ADVERSE CONSEQUENCES ADVERSE EFFECTS AGGREGATE INVESTMENT AGRICULTURAL COMMODITIES AGRICULTURAL PRODUCTS AGRICULTURE ANNUAL GROWTH APPAREL AVERAGE TARIFF AVERAGE TARIFFS BALANCE OF PAYMENT BALANCE OF PAYMENTS BALANCE OF PAYMENTS CONSTRAINT BASE YEAR BENCHMARK BILATERAL AGREEMENT BILATERAL TRADE CAPACITY BUILDING CAPITAL ACCUMULATION CAPITAL FORMATION CAPITAL INCOME CAPITAL INFLOWS CAPITAL STOCK CAPITAL STOCKS CENTRAL BANK COMMODITY PRICE COMMON MARKET COMPARATIVE ADVANTAGE CONCESSIONS CONSTANT ELASTICITY OF SUBSTITUTION CONSTANT ELASTICITY OF TRANSFORMATION CONSTANT RETURNS TO SCALE CONSUMER PREFERENCES CONSUMER SURPLUS CONSUMERS CONSUMPTION BASKET CONSUMPTION LEVELS CURRENT ACCOUNT CURRENT ACCOUNT BALANCE DEBT DEBT SERVICE DEMAND CURVE DEMAND GROWTH DEMAND SHOCKS DEPENDENT VARIABLE DISPOSABLE INCOME DISPOSABLE INCOMES DISPUTE SETTLEMENT DOMESTIC CONSUMPTION DOMESTIC DEMAND DOMESTIC GOODS DOMESTIC PRICE DOMESTIC PRICES DOMESTIC PRODUCERS ECONOMIC IMPLICATIONS ELASTICITY ELASTICITY OF SUBSTITUTION EQUILIBRIA EXPANSION OF EXPORTS EXPENDITURE FUNCTION EXPORT GROWTH EXPORT MARKETS EXPORT ORIENTATION EXPORT PRICES EXPORT SHARES EXPORT SUPPLY EXPORT VOLUME EXPORT VOLUMES EXPORTER EXPORTERS EXPORTS EXTERNAL DEBT EXTERNAL PROTECTION FACTOR MARKETS FISCAL DEFICIT FOOD PRICES FORECASTS FOREIGN CAPITAL FOREIGN DEBT FOREIGN DIRECT INVESTMENT FREE ACCESS FREE TRADE FREE TRADE AGREEMENT FULL LIBERALIZATION FULL TRADE LIBERALIZATION GDP GDP PER CAPITA GENERAL EQUILIBRIUM GENERALIZED SYSTEM OF PREFERENCES GLOBAL DEMAND GLOBAL MARKET GLOBAL MARKETS GNP GOVERNMENT BONDS GROWTH PERFORMANCE GROWTH PROJECTIONS GROWTH RATE GROWTH RATES IMBALANCES IMPERFECT COMPETITION IMPORT IMPORT COMPETITION IMPORT CONTENT IMPORT DEMAND IMPORT PRICES IMPORT QUOTAS IMPORT TARIFFS IMPORTS INCOME INCOME ELASTICITIES INCOME ELASTICITY INCOME ELASTICITY OF DEMAND INCOME GROWTH INCREASING RETURNS INCREASING RETURNS TO SCALE INTERMEDIATE GOODS INTERMEDIATE INPUTS INTERNATIONAL CAPITAL FLOWS INTERNATIONAL FINANCIAL STATISTICS INTERNATIONAL TRADE INVENTORIES INVESTMENT CLIMATE INVESTMENT DEMAND INVESTMENT GOODS INVESTMENT INFLOWS INVESTMENT LIBERALIZATION INVESTMENT SPENDING LABOR FORCE LABOR MARKET LABOR MARKET SEGMENTATION LABOR MARKETS LIBERALIZATION OF TRADE LOST TARIFF REVENUE LOW TARIFF MACROECONOMIC EFFECTS MACROECONOMIC VARIABLES MARGINAL PROPENSITY TO SAVE MARKET ACCESS MARKET SHARE MONOPOLISTIC COMPETITION MULTILATERAL LIBERALIZATION MULTILATERAL TRADE NATURAL RESOURCES NEOCLASSICAL MODELS OPEN ECONOMY OPTIMIZATION PREFERENTIAL TRADE PRICE FLUCTUATIONS PRICE INDEX PRIVATE CAPITAL PRIVATE CONSUMPTION PRIVATE INVESTMENT PRODUCTIVITY PRODUCTIVITY GROWTH PROTECTION DATA PUBLIC DEBT PUBLIC EXPENDITURE PUBLIC INVESTMENT PUBLIC SPENDING RATE OF GROWTH REAL EXCHANGE RATE REAL GDP REGULATORY FRAMEWORKS RELATIVE PRICE RELATIVE PRICES REMITTANCE REMITTANCES SAFETY NETS SHORTFALL SUPPLY SIDE TARIFF BARRIERS TARIFF DATA TARIFF RATE TARIFF RATES TARIFF REDUCTION TARIFF REDUCTIONS TARIFF REVENUES TARIFFS ON IMPORTS TECHNICAL ASSISTANCE TEXTILE TARIFF TOTAL DEBT TOTAL EXPORTS TOTAL FACTOR PRODUCTIVITY TOTAL IMPORTS TOTAL INVESTMENT TOTAL OUTPUT TRADE BARRIERS TRADE DIVERSION TRADE FACILITATION TRADE LIBERALIZATION TRADE POLICY TRADE REFORM TRADING PARTNER TRADING PARTNERS TRANSITION MATRIX UNCERTAINTIES UNCERTAINTY UNEMPLOYMENT UNEMPLOYMENT RATE UNILATERAL LIBERALIZATION UNSKILLED LABOR UNSKILLED WORKERS URUGUAY ROUND UTILITY FUNCTION UTILITY FUNCTIONS VALUE ADDED WAGE DIFFERENTIALS WAGES WEIGHTS WELFARE GAINS WORLD MARKET WORLD PRICE WORLD PRICES WTO ZERO TARIFF This paper quantifies the likely benefits of trade and investment liberalization in a small, poor, open economy, using the accession of Honduras to the Dominican Republic-Central American Free Trade Agreement as a case study. The results show that bilateral trade liberalization with the United States is likely to have almost no effect on welfare in Honduras, while the reciprocal removal of protection vis-a-vis the rest of Central America would lead to significantly larger gains. Potential gains from increased net foreign direct investment inflows overwhelm those expected from trade reform alone, particularly if the new foreign direct investment generates productivity spillovers. However, if it is to replace Honduran investment rather than complement domestic capital formation, growth performance is unlikely to improve and may even suffer. The paper's results identify several areas for policy attention by Honduran policy makers to make the Dominican Republic-Central American Free Trade Agreement more development-friendly. These include carefully considering the budgetary implications of trade reform, widening social safety nets to counter the trends toward increasing income inequality, and sequencing the reforms to ensure a close alignment of Honduras' comparative advantage on the regional and global markets. 2012-05-29T18:06:57Z 2012-05-29T18:06:57Z 2008-02 http://documents.worldbank.org/curated/en/2008/02/9039020/preferential-liberalization-economy-wide-effects-honduras http://hdl.handle.net/10986/6574 English Policy Research Working Paper; No. 4537 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Latin America & Caribbean Honduras |