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The effect of WTO and FTAA on agriculture and the rural sector in Latin America

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  • Morley, Samuel
  • Piñeiro, Valeria

Abstract

"In this paper we analyze the effect on output, employment and poverty of two (2) alternative versions of further trade liberalization one representing free trade world wide (WTO) and the other a Western hemisphere free trade bloc (FTAA). The paper introduces international commodity price changes derived from a world model into national Computable General Equilibrium (CGE) and microsimulation models for fifteen (15) Latin American countries to estimate how FTAA and WTO would affect sectoral output, employment, wages and poverty levels at the national level for each of the countries. We found that either of these two alternatives is expansionary for both output and employment in general and for agriculture in particular in most Latin American countries. WTO particularly favors the rural sector because the elimination of producer subsidies in developed countries causes a big increase in prices of all food commodities, especially on grains, dairy products and milk. As a result we found that in general, trade liberalizationreduced skill differentials, both within the urban sector, and where we had the information, between the rural and urban unskilled. Finally, the poverty microsimulation exercise showed that the poor are helped by either WTO or FTAA. Either version reduces poverty and inequality, and the changes are especially significant under the WTO. Clearly the rural poor pay a fairly heavy price for the producer subsidies in developed countries." Authors' Abstract

Suggested Citation

  • Morley, Samuel & Piñeiro, Valeria, 2004. "The effect of WTO and FTAA on agriculture and the rural sector in Latin America," DSGD discussion papers 3, International Food Policy Research Institute (IFPRI).
    • Handle: RePEc:fpr:dsgddp:3
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    References listed on IDEAS

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    1. Xinshen Diao & Eugenio Díaz-Bonilla & Sherman Robinson, 2003. "Scenarios for Trade Integration in the Americas," Economie Internationale, CEPII research center, issue 94-95, pages 33-51.
    2. Almeida dos Reis, Jose Guilherme & Paes de Barros, Ricardo, 1991. "Wage inequality and the distribution of education : A study of the evolution of regional differences in inequality in metropolitan Brazil," Journal of Development Economics, Elsevier, vol. 36(1), pages 117-143, July.
    3. Unknown, 2001. "General Discussion," Proceedings of the 6th Agricultural and Food Policy Systems Information Workshop, 2000: Trade Liberalization Under NAFTA: Report Card on Agriculture 16839, Farm Foundation, Agricultural and Food Policy Systems Information Workshops.
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    Cited by:

    1. Will Martin & Kym Anderson, 2008. "Agricultural trade reform under the Doha Agenda: some key issues ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 52(1), pages 1-16, March.
    2. Nigel Grimwade & David G. Mayes & Jiao Wang, 2011. "Estimating the Effects of Integration," Chapters, in: Miroslav N. Jovanović (ed.), International Handbook on the Economics of Integration, Volume III, chapter 13, Edward Elgar Publishing.

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