Trade Liberalization Programs Research Articles

Gender in the World Food Economy: Inequitable Transformation of Haiti’s Food Economy

Over the past five decades, agricultural trade liberalization and integration into the global food system have undermined gender equality, women’s empowerment, and food security in Haiti. International actors who design agricultural policies are aware of gendered contributions to Haitian food security, yet ignore this knowledge to privilege an ideological belief that trade liberalization and structural adjustment programs will advance gender equality. I argue that agriculture and food policies must treat gender roles and responsibilities as constitutive to the solution by recognizing their critical contribution to the structure of Haitian agrarian society and accordingly food security. I advance this claim by analyzing scholarly literature, institutional documents, and interviews with interlocutors (n= 292) from rural, peri-urban, and urban settings across Haiti to document how: 1) dominant narratives support an ideological belief that trade liberalization will advance gender equality; 2) integration of Haiti’s local food economy into the world food economy demands the reorientation of gendered labour; 3) women must participate in a system that while purporting to improve food security, ultimately diminishes their nutrition and social, economic and political wellbeing. This research documents that policies designed to globalize Haiti’s food economy on the premise of improving food security actually force women to abandon agricultural production and intensify their labour in less lucrative distribution and consumption roles of imported goods. This analysis documents that the transition ultimately reifies gender inequalities, heighten food insecurity, and contributes to feminist food scholarship.

Disaggregated Imports Demand Functions: An Empirical Analysis for Pakistan

Given the importance of international trade in the economic performance of a country, voluminous research work has been carried out on the determinants of aggregate exports and imports. The present study departs from the conventional approach by analyzing demand of imports in a commodity-wise disaggregated fashion. As different products respond differently to trade policies and exchange rates, therefore policy makers can focus on the particular products when designing their policies for imports. Specifically, this study attempts to analyze the impact of prices, income level, foreign exchange reserves, exchange rate and trade liberalization program on 26 commodities defined by SITC 3-digit classification in which Pakistan has been most often a net importer. Using data for the period 1982 to 2010, GMM estimates reveal inelastic response of the major commodities to their own prices and are growth driven.

Financial Openness, Trade Integration And Economic Growth: The Case Of Pacific Melanesian Countries

There has been growing debate about the relationship between financial sector development and the economic growth process. This research attempts to explore the impact of financial market changes on the real economies of the Melanesian Spearhead Group (MSG) countries over the period 1970 to 2015. Financial markets in small developing economies tend to be less efficient and only provide narrower range of financial products and services. We employ a random effect model with general-to-specific sequential modelling procedure to re-examine FD-growth nexus. In line with financial intermediation theories, our results show that a well-functioning financial system is critical and has a significant effect on economic performance through enhancing the intermediation efficiency. A long-run equilibrium relationship between trade openness and economic growth is revealed; suggesting that trade liberalization programs in these countries may have direct positive effect on income growth. Policy-wise, we believe policy makers and government leaders, in partnership with development organizations, should work together to provide the enabling framework to facilitate the growth of an innovative financial system that will promote long-term financial sector deepening in these countries. This may include: mechanisms (such as credit reporting frameworks) to grow the banking and non-banking sectors; improving financial infrastructure and integration; enhancing skills and conditions in the informal sector; and enabling local condition for a better technological diffusion. This will all create a favourable environment for investment and trade which will in turn strengthen long-term economic prospects and outlook.

Do cash transfers help the poor during trade liberalization? Evidence from Laos

Our objective is to assess the impact of trade liberalization and cash transfer programs on poverty and income distribution in Laos.We use the computable general equilibrium model and micro-simulation to assess the impact of transfer programs during trade liberalization.The results of this study indicate that cash transfers reduce poverty and narrow income inequality during trade liberalization. Policy-makers should promote development and implementation of cash transfer in Laos in order to protect poor people from the external shocks such the impact of trade liberalization. This finding might have significant impact on promotion of cash transfer programs in order to reduce poverty and income inequality.This is the first paper to investingate the impact of a cash transfer program on poverty in Laos during trade liberalization.

Welfare implications of trade liberalization and fiscal reform: A quantitative experiment

This paper studies the welfare implications of revenue-neutral trade liberalization and fiscal reform programs for developing economies using a multi-sector dynamic general equilibrium model of a small open economy. We analyze how different combinations of tariffs – on imported consumption goods, intermediate inputs, and capital goods – and taxes – on consumption, labor income and capital income – affect the transitional and long-run welfare. We report three main findings. First, trade liberalization programs financed by consumption and labor income taxes tend to result in substantial welfare gains, but financing the lost tariff revenue through capital income taxes can have an adverse impact on welfare. Second, a significant fraction of welfare changes is due to transitional effects stemming from the allocation of resources in response to changes in tariffs and taxes. Third, trade liberalization and fiscal reform programs often translate into much larger welfare gains in countries that are more open to international financial markets.

Scope of the ‘Liberalization Program’ in the Andean Community

Among efforts of community cooperation worldwide, the Andean Community in South America is a notable example. This sub-regional organisation aims to achieve social and economic cooperation among its Member Countries with a view to the gradual formation of a Latin American common market. To attain this objective, the Cartagena Agreement provides, among other measures, the possibility to implement a trade Liberalization Program, aimed at eliminating any restriction or levy that affects imports of products originating in the territory of any Member Country. This paper focuses on the analysis of that Program, and how it falls within the so-called ‘constitutional’ or ‘original’ sources of the Andean legal system. It also examines the attributions of the Andean Community General Secretariat to determine through an investigation procedure whether a particular measure constitutes a levy or restriction.

<b> Cronologia Analítica das Relações Externas do MERCOSUL </b> 10.5102/uri.v9i1.1376

The aim of this paper is to present an analytical timeline (with didactic purposes), specifically for researchers interested in the external relations of the Southern Common Market, with special emphasis in the last 15 years. We list the negotiations developed, the agreements reached and its major developments, regarding the trade liberalization program eventually adopted. The regional bloc's external relations are examined in four distinct spheres, but interrelated, which will be: the multilateral sphere under the auspices of the World Trade Organization (WTO); the hemispheric sphere, regarding the negotiations for the establishment of the Free Trade Area of the Americas, the intra-zone sphere, with respect to arrangements with the other member countries of the Latin American Integration Association, under which MERCOSUR is considered a sub-regional scheme integration and, finally, the extra-zone sphere, in which the negotiations with all other trading partners are developed.

Trade policy and specialization in developing countries

This paper examines the impact of trade policy on specialization patterns in ten Latin American countries over the period 1985–1998. These countries are natural case studies because in the last decades they implemented comprehensive trade liberalization programs, both generally and preferentially, starting from relatively high tariff protection levels. Our econometric results suggest that reducing own most favored nation tariffs is associated with increasing manufacturing production specialization. Furthermore, we find that preferential trade liberalization and differences in the degree of unilateral openness have resulted in increased dissimilarities in manufacturing production structures across countries. These results are robust across specialization measures and estimation methods.

EFFECT OF TRADE LIBERALIZATION ON FRUIT EXPORT FROM THE SOUTHERN MEDITERRANEAN: CASE STUDY OF ISRAELI FRUITS

The Policy of the EU grants freer access and agricultural trade preferences to non-EU countries in the Mediterranean. However, in spite of the trade liberalization process in agriculture on the whole, the value of fruit export from the Mediterranean to the EU has not increased since 1995 when the policy was enacted. The purpose of this study was to examine the effect of trade liberalization on fruit export from Israel. Changes in the comparative advantage of eight major export fruits from Israel were tested by using the Revealed Comparative Advantage (RCA) approach. Gravity regression modeling was used to measure changes in export from Israel and Morocco (for comparison) resulting from the trade liberalization process. Panel data was analyzed to the level of individual fruits. In the ten years of trade liberalization, the export value of the major Israeli fruits decreased 34% although the competitiveness of at least half the fruits increased according to the export value and the RCA index. The gravity regression model allowed us to measure significant factors and compare changes in fruit export from Israel and Morocco, according to which implementation of the trade liberalization program caused a 40% decrease for Israel and a 79% increase for Morocco.

Effect of Trade Liberalization on Fruit Export from the Southern Mediterranean: Case Study of Israeli Fruits

The Policy of the EU grants freer access and agricultural trade preferences to non-EU countries in the Mediterranean. However, in spite of the trade liberalization process in agriculture on the whole, the value of fruit export from the Mediterranean to the EU has not increased since 1995 when the policy was enacted. The purpose of this study was to examine the effect of trade liberalization on fruit export from Israel. Changes in the comparative advantage of eight major export fruits from Israel were tested by using the Revealed Comparative Advantage (RCA) approach. Gravity regression modeling was used to measure changes in export from Israel and Morocco (for comparison) resulting from the trade liberalization process. Panel data was analyzed to the level of individual fruits. In the ten years of trade liberalization, the export value of the major Israeli fruits decreased 34% although the competitiveness of at least half the fruits increased according to the export value and the RCA index. The gravity regression model allowed us to measure significant factors and compare changes in fruit export from Israel and Morocco, according to which implementation of the trade liberalization program caused a 40% decrease for Israel and a 79% increase for Morocco.

Safta: Living in a World of Regional Trade Agreements

The paper evaluates the South Asia Free Trade Agreement (SAFTA) within the global structure of overlapping regional trade agreements (RTAs) using a modified gravity equation. First, it examines the effects of the Trade Liberalization Program which started in 2006. SAFTA would have a minor effect on regional trade flows and the impact on custom duties would be a manageable fiscal shock for most members. Second, the paper ranks the trade effects of other potential RTAs for individual South Asian countries and SAFTA: RTAs with North American Free Trade Agreement (NAFTA) and the European Union (EU) dominate one with the Association of South East Asian Nations (ASEAN).

Specialization and Diverging Manufacturing Structures: The Aftermath of Trade Policy Reforms in Developing Countries

Trade barriers have been declining around the world over the last five decades. Countries reduced their tariffs unilaterally as well as concertedly in the framework of regional integration agreements. As a consequence, trade flows among economies have substantially intensified. According to economic theory, this should have had a significant impact on the countries' specialization patterns. However, to our knowledge, there is no direct robust econometric evidence on the effect of trade policy on the overall degree of countries' specialization. This paper aims at filling this gap in the literature. We focus on ten Latin American countries members of the LAIA (Latin American Integration Association) over the period 1985-1998. These countries are natural case studies because in the last two decades they implemented broad and comprehensive trade liberalization programs, both generally and preferentially, starting from relatively high tariff protection levels. Our econometric results suggest that reducing own MFN tariffs is associated with increasing manufacturing production specialization. Furthermore, we find that preferential trade liberalization and differences in the degree of unilateral openness have resulted in increased dissimilarities in manufacturing production structures across countries. These results are robust to the specialization measure being used, the correction for group-wise heteroscedasticity, cross-sectional correlation, serial correlation and endogeneity biases, and the inclusion of indicators to account for the real exchange misalignment prevailing in the region during the period under examination.

Economic Integration and Manufacturing Concentration Patterns: Evidence from MERCOSUR

Over the past two decades, Argentina, Brazil, Paraguay, and Uruguay have implemented unilateral trade liberalization programs and formed MERCOSUR. The effects of these reforms on production structures in these countries have not received a great deal of attention. This paper analyses patterns of relative manufacturing concentration in Argentina, Brazil, and Uruguay over the period 1985–1998. Our results indicate that localisation of demand and comparative advantages are the main driving forces of these patterns. The establishment of MERCOSUR has fostered the relative importance of factor endowments and production linkages in shaping the spatial distribution of manufacturing in the above three countries.

WTO Safeguards and Trade Liberalization: Lessons from the Argentine Footwear Case

The footwear case provides an example of the complexities of WTO rules on the use of safeguards, and of the interaction of multilateral and regional processes of liberalization. As a result both of Argentina's unilateral liberalization and the removal of barriers within Mercosur, imports of footwear increased rapidly. As Mercosur provides no intra-regional safeguard mechanism, the government of Argentina responded by applying import relief and WTO safeguards against third countries. The WTO Dispute Settlement Body addressed these measures and as a consequence, Argentina dismantled most of them, leading to four main conclusions. First, the jurisprudence of the WTO's Appellate Body, has created serious uncertainty as to when a country can use safeguards. This does not contribute to the political balance that has to be maintained when developing countries implement trade liberalization programs; in fact, it detracts from this crucial goal. Second, it is an error to negotiate ambiguous multilateral agreements on the expectation that the WTO Dispute Settlement mechanism will clarify them. Third, an overvalued currency heightened the industry's problems. In the case of footwear, the decline in imports following the recent devaluation was more important than that following the implementation of earlier relief measures. Fourth, the political economy of liberalization also indicates the need for regional agreements to include adequate transition mechanisms that will facilitate adjustment to free trade and to maintain support for it.

Comments and Discussion

Erik Thorbecke Over the years I have enjoyed reading Martin Ravallion's papers, and this one is no exception. It highlights some fundamental issues inherent to the concept of income inequality in a transparent way and provides a convincing explanation of the conflict between the two sides of the globalization debate. Since I agree pretty much with the content of the author's paper, I propose to raise a few issues extending his analysis. I have four comments: the first two are relatively minor points whereas the last two are substantive and go to the heart of measuring income inequality. First, Ravallion correctly points out that "churning," that is, two individuals swapping places in the income distribution so that one person gains and another loses, would not be seen to have any impact on the inequality measure whatsoever. Yet he remarks that "one should not be surprised if the losers in the process are unhappy about the outcome and that this fuels criticisms of the policies that led to it." But the issue is deeper: any churning, assuming a convex utility function (reflecting declining marginal utility of income), will lead to a net reduction of utility. The loss of utility to the loser will be greater than the gain in utility to the gainer. Hence if enough churning takes place, it could be potentially destabilizing from a societal standpoint. A second minor comment is that class conflicts could result from vertical inequality. For example, a structural adjustment and trade liberalization program could lead to higher food prices in a developing country, benefiting farmers who are net sellers of food, while agricultural workers (the landless) would be negatively affected by the reform. Now I come to my more substantive comments. Ravallion is concerned about the robustness of population-weighted inequality series and the need for statistical [End Page 24] caution in inferring that inequality is falling when weighting people equally. I believe that this is a crucial issue that needs to be extended not just to the underlying data but also to the implicit and explicit assumptions and methodologies used in deriving world inequality measures. The fundamental question that needs to be asked is, how sensitive is the Gini coefficient (or any other inequality measure) to measurement errors and assumptions used in deriving it? Instead of reporting one unique scalar value for the Gini coefficient, could one derive a range of values depending on Bayesian and non-Bayesian estimates of the likely effects of measurement errors and underlying methodologies used to derive the worldwide income distribution? One advantage of this procedure would be that it would force the analyst to identify and confront the key assumptions and measurement errors to which the Gini coefficient is sensitive. Let me illustrate with the help of some examples. In his derivation of the change in inequality in the worldwide income distribution, Sala-i-Martin made a number of assumptions.1 For example, he left out the former Soviet Republics, Bulgaria, and Yugoslavia—countries that all underwent large increases in inequality in the 1990s. He also derived within-country distributions from quintile distributions, assuming zero variance within quintiles. This use of sparse and fragmentary data led Milanovic, paraphrasing Winston Churchill, to claim that "never was so much calculated with so little."2 The question I am raising is how far can one go in estimating the likely effects of such assumptions on the real Gini? It should certainly be possible to infer how much the Gini coefficient would be underestimated by ignoring the intraquintile variance (using six points of an income distribution rather than the whole distribution). When it comes to measurement errors, we can distinguish between sampling errors—to the extent that much of the information comes from household surveys—and nonsampling errors. The latter clearly dwarf the former. One example given in Ravallion's paper is the systematic bias in computing growth rates for China: the long-term annual per capita growth rate is likely to have been overestimated by 1 to 2 percent...

Environmental Impact of India's Trade Liberalization

Abstract: In the last decade, there has been increasing concern about the environmental consequences of trade liberalization. Trade liberalization may lead to higher pollution levels - if polluting industries relocate from countries with strict environmental policy to countries with less stringent environmental policy or as a result of increased production and exports from dirty industries. However, empirical evidence on the relationship between trade liberalization and the environment remains ambiguous. This paper contributes to the literature on the environmental consequences of trade liberalization episodes in developing countries by analyzing the composition (pollution intensive versus less pollution intensive) of manufacturing export, domestic production and foreign investment inflows around the period of India’s trade liberalization program of 1991. Faced with a severe balance of payments crisis in 1991, the Indian government embarked on an economic reform program that included industrial and trade policy, financial sector reforms and privatization. In this paper we focus on the environmental impact of India’s trade liberalization policies. India has weaker environmental enforcement regime relative to its main trading partners . Therefore there is concern that trade liberalization could potentially encourage the use of India as a production base for more pollution intensive production. We have assembled industry-level economic and environmental data aggregated at the all India level for the manufacturing sector from various Indian government agencies. Using this unique database, we examine test three hypotheses. First we examine the composition of domestic production at the all India level pre and post-liberalization. We ask whether India's domestic production is larger in the 'dirtier' industries within the manufacturing sector and whether production has shown a greater increase in the dirtier industries between the pre and post-liberalization periods. Second, we analyze the composition of manufacturing export to determine whether India is specializing in pollution intensive exports in the post-liberalization period compared to the pre-liberalization period. Finally, we examine whether foreign direct investment (FDI) has shown greater increase in the pollution intensive industries in the post-trade liberalization period relative to FDI into less polluting industries. This study extends the work of previous empirical research on the environmental impact of trade liberalization episodes in developing countries (such as Grossman and Krueger, 1993 and Gamper, 2001). Due to a lack of reliable data there are very few empirical studies that examine the environmental impact of trade liberalization episodes in developing countries. Using time-specific trade and FDI liberalization episode as a policy shock, we are able to identify the effect of the liberalization episode on the environment. We are therefore able to avoid the identification problem that plague other industry-level analysis that regress trade or FDI variables on environmental indicators, whereby the liberalization episode may influence the composition of dirty versus clean production and in turn, environmental policies may also influence trade policy. In the case of India's liberalization, political economy studies suggest that Indian regulators' choice of which industries to liberalize was driven by economic considerations, not by their environmental intensity. Indeed we do not find a strong correlation between the industries liberalized and their pollution intensity. Moreover, at the time of India's liberalization, no major environmental policy changes took place that could explain changes in pollution intensity of production and exports. Therefore, by examining the changes in pollution intensity of exports, production and FDI between the pre and post-liberalization periods, we are able measure possible environmental impact of India’s liberalization episode. While the environmental impact of liberalization episodes in developing countries will be dependent on their specific endowments and specific programs of liberalization, India, which shares the typical characteristics of developing countries of having weaker environmental policies and previous trade barriers that favored capital intensive individuals, provide an interesting case study. The results from this study show that there has been a moderate increase in air and water pollution intensive exports in the post liberalization period compared to the pre-liberalization period. The results also provide support for the hypothesis that there has been a marginal increase in FDI inflows into sectors with higher air and water pollution intensity, after we address the sample selection issue in the dataset. These results are robust to different empirical specifications. These findings suggest that while the liberalization policy has been pursued to promote economic growth, it has led to some potentially adverse environmental consequences. The findings suggest that there is trade-off between the economic gains from liberalizations and the environmental consequences from the liberalization episode that has not been accompanied by a strengthening of environmental policies. The government would therefore need to make an informed decision on how to balance the trade-off between economic gains from liberalization and the costs and benefits of stronger enforcement against polluters. The case study of India serves as a caution for strengthening environmental policies at the time when liberalization of trade and investment regimes is being contemplated.

Betting against the state socially costly financial engineering

The central question raised in this paper is the desirability of state-contingent contracts under imperfect policy credibility. The paper shows a benchmark case in which imperfect credibility of a trade liberalization program is distorting, and the distortion is magnified by state-contingent markets. In addition, it examines the welfare implications of gaining credibility, concluding that, in general, more credibility is better than less, and examines the more hazard faced by policymakers in carrying out reform in case the private sector is able to obtain insurance against its discontinuation.

U.S. Agricultural Trade with Mexico

This study examined the effects of exchange rates, economic growth, trade liberalization, and export assistance programs on U.S. agricultural exports to Mexico. The Commodity Credit Corporation's GSM-102 Export Credit Guarantee Program reduces the risk associated with export financing and payment. The impact of the export credit guarantee program on U.S. agricultural exports to Mexico was estimated in an import demand model using quarterly data from 1980 to 1996. The results indicate that for every $1 of export credit guarantees, Mexican imports of U.S. farm products increased $0.30. Real income growth in Mexico, however, was the most important factor in the expansion of U.S. exports. Trade liberalization under NAFTA also increased U.S. exports to Mexico.

Evidence on the Contribution of Trade Reform Towards International Income Equilization

This paper provides some historical evidence on the impact of trade reform on income disparities between the liberalizing countries. The convergence test developed here involves joint estimation of augmented Dickey‐Fuller type equations using seemingly unrelated regression (SUR) techniques. Monte Carlo simulations are used to calculate the critical values which are in turn used to determine the significance of convergence. We find that countries which embarked on extensive trade liberalization programs exhibited significant income convergence with one another while countries that did not liberalize trade showed no evidence of convergence.

Antitrust and Liberalization in developing countries

A number of developing countries around the world have recently liberalized once highly protected regimes through privatization programs and by reducing impediments to market trade. Many of these countries have adopted an antitrust policy as an integral component of their market reforms. Recent assessments of trade liberalization programs show disappointing results. Such outcomes contradict long-held beliefs that free trade is sufficient to generate competitive outcomes in small economies. Antitrust advocates view these underwhelming achievements as further justification for extensive antitrust enforcement. We argue instead that the failure of liberalization suggests not the correctness but the inappropriateness of the enactment of antitrust policies. The continuance of market power after liberalization is due primarily to lobbying activities by producer interest groups to establish nontariff barriers rather than to collusive practices among producers. Interest groups find cartelization and rent seeking a...