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| Morley, Samuel A.; Nakasone, Eduardo; Pineiro, Valeria. |
| In this paper we develop a dynamic CGE model to examine the impact of CAFTA on production, employment and poverty in Honduras. We model four aspects of the agreement: tariff reductions, quotas, changes in the rules of origin for maquila and more generous treatment of foreign investment. We first show that trade liberalization under CAFTA has a positive effect on growth, employment and poverty but the effect is small. What really matters for Honduras is the assembly (maquila) industry. CAFTA liberalized the rules of origin for imports into this industry. That raises the growth rate of output by 1.4% and reduces poverty by 11% in 2020 relative to what it would otherwise have been. Increasing capital formation through an increase in foreign investment in... |
| Tipo: Working or Discussion Paper |
Palavras-chave: CAFTA; Honduras; Growth; Poverty; CGE model; International Relations/Trade. |
| Ano: 2008 |
URL: http://purl.umn.edu/42349 |
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| Morley, Samuel A.; Nakasone, Eduardo; Pineiro, Valeria. |
| In this paper we develop a dynamic CGE model to examine the impact of CAFTA on production, employment and poverty in El Salvador. We model four aspects of the agreement: tariff reductions, quotas, changes in the rules of origin for maquila and more generous treatment of foreign investment. The model shows that CAFTA has a small positive effect on growth, employment and poverty. Tariff reduction under CAFTA adds about .2% to the growth rate of output up to 2020. Liberalizing the rules of origin for maquila has a bigger positive effect on growth and poverty mainly because it raises the demand for exportables produced by unskilled labor. We model the foreign investment effect by assuming that capital inflows go directly to capital formation. This raises the... |
| Tipo: Working or Discussion Paper |
Palavras-chave: CAFTA; El Salvador; Growth; Poverty; CGE model; Food Security and Poverty; International Relations/Trade. |
| Ano: 2007 |
URL: http://purl.umn.edu/42356 |
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