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Trade Policy and Poverty Reduction in Brazil
Authors:Harrison  Glenn W; Rutherford  Thomas F; Tarr  David G; Gurgel  Angelo
Institution:Glenn W. Harrison is professor of economics at the University of Central Florida; his e-mail address is glenn.harrison{at}bus.ucf.edu. Thomas F. Rutherford is professor of economics at the University of Colorado; his e-mail address is rutherford{at}colorado.edu. David G. Tarr is lead economist at the World Bank; his e-mail address is dtarr{at}worldbank.org. Angelo Gurgel is professor of economics at the Universidade de São Paulo in Brazil; his e-mail address is angelo_gurgel{at}yahoo.com.br.
Abstract:A multiregion computable general equilibrium model is used toevaluate the regional, multilateral, and unilateral trade policyoptions of Mercosur from the perspective of the welfare of allpotential partners in several proposed agreements. The focusfor Brazil is on poverty impacts. The results show that thepoorest households in Brazil experience gains of 1.5–5.5percent of their consumption, which are about three to fourtimes the average gains for Brazil. Protection in Brazil favorscapital-intensive manufacturing relative to unskilled labor-intensiveagriculture and manufacturing. So trade liberalization raisesthe return to unskilled labor relative to capital and disproportionatelyhelps the poor.
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