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Adjustment to trade reform in Ecuador

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  • HUGO TOLEDO

Abstract

This paper simulates output adjustments and income redistribution in Ecuador with the emerging Free Trade Agreement of the Americas (FTAA). The Specific Factors (SF) model of production is used to develop comparative statistics elasticities of changing prices on factor prices and output as Ecuador adjusts to free trade. Skilled and unskilled labor stands to lose due to falling prices in the services and agricultural sectors. Returns to capital and output fall in sectors exposed to import competition while they increase in sectors expected to enjoy higher export demand. The magnitude of the adjustment is large.

Suggested Citation

  • Hugo Toledo, 2005. "Adjustment to trade reform in Ecuador," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 8(1), pages 41-53.
    • Handle: RePEc:taf:jpolrf:v:8:y:2005:i:1:p:41-53
    DOI: 10.1080/1384128042000328932
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    References listed on IDEAS

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    1. Edward J. Balistreri & Christine A. McDaniel & Eina Vivian Wong, 2003. "An Estimation of U.S. Industry-Level Capital-Labor Substitution," Computational Economics 0303001, University Library of Munich, Germany.
    2. Ronald W. Jones, 2018. "The Structure of Simple General Equilibrium Models," World Scientific Book Chapters, in: International Trade Theory and Competitive Models Features, Values, and Criticisms, chapter 4, pages 61-84, World Scientific Publishing Co. Pte. Ltd..
    3. Thompson, Henry, 1994. "An investigation into the quantitative properties of the specific factors model of international trade," Japan and the World Economy, Elsevier, vol. 6(4), pages 375-388, December.
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