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Structural Change and Poverty Reduction in Brazil: The Impact of the Doha Round

Author

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  • Bussolo, Maurizio
  • Lay, Jann
  • van der Mensbrugghe, Dominique
Abstract
For the Brazilian case, this paper intends to evaluate the poverty effects of possible trade liberalization outcomes of the Doha round in the medium run. This implies to assess the poverty impact of a Doha Round (and a Full Liberalization) counterfactual scenario against a scenario that incorporates some of the main features of medium run structural change. In doing so, we focus on the labor market, as we consider this transmission channel to be of overriding importance in this time horizon. We will thus examine whether the effects of trade liberalization, in particular on poverty and the distribution of income, are still prominent in the medium run. The main poverty-relevant transmission channels incorporated in our simulation exercise are changes real factor prices and changes in the sectoral composition of the workforce. These changes are driven by changing consumption patterns, differentials in productivity growth rates across sectors, educational upgrading of the workforce, and, finally, the trade shocks. The methodology used here combines a dynamic computable general equilibrium model with a microsimulation model for Brazil. This macro-micro model enables us to analyze the mediumterm poverty and distributional impact of different growth patterns in quite some detail. Our analysis suggests that the economic effects of the Doha round, even of an “optimistic deep” liberalization scenario, are rather limited for Brazil. Accordingly, poverty would remain largely unaffected by this trade reform, which does not appear to be biased in favor any of particularly poor groups. Yet, through a slight improvement in the urban income distribution the Doha scenario has some positive effect on poverty. In contrast, a full liberalization scenario implies quite substantial welfare gains that are concentrated among some of the poorest groups of the country, in particular those in agriculture.

Suggested Citation

  • Bussolo, Maurizio & Lay, Jann & van der Mensbrugghe, Dominique, 2005. "Structural Change and Poverty Reduction in Brazil: The Impact of the Doha Round," Conference papers 331338, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:331338
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    References listed on IDEAS

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    Cited by:

    1. Nadia Belhaj Hassine & Veronique Robichaud & Bernard Decaluwé, 2010. "Agricultural Trade Liberalization, Productivity Gain and Poverty Alleviation: A General Equilibrium Analysis," Working Papers 519, Economic Research Forum, revised 05 Jan 2010.
    2. repec:ilo:ilowps:468902 is not listed on IDEAS
    3. Bussolo, Maurizio & Niimi, Yoko, 2009. "Do Regional Trade Pacts Benefit the Poor? An Illustration from Dominican Republic--Central American Free Trade Agreement in Nicaragua," World Development, Elsevier, vol. 37(1), pages 146-160, January.
    4. Bussolo, Maurizio & Maliszewska, Maryla & Murard, Elie, 2014. "The long-awaited rise of the middle class in Latin America is finally happening," Policy Research Working Paper Series 6912, The World Bank.
    5. Jann Lay, 2010. "Sequential macro-micro modelling with behavioural microsimulations," International Journal of Microsimulation, International Microsimulation Association, vol. 3(1), pages 24-34.
    6. Nicolas Hérault, 2010. "Sequential linking of Computable General Equilibrium and microsimulation models: a comparison of behavioural and reweighting techniques," International Journal of Microsimulation, International Microsimulation Association, vol. 3(1), pages 35-42.
    7. Rafael E. de Hoyos & Denis Medvedev, 2011. "Poverty Effects of Higher Food Prices: A Global Perspective," Review of Development Economics, Wiley Blackwell, vol. 15(3), pages 387-402, August.
    8. Unknown, 2009. "Journal of International Agricultural Trade and Development, Volume 5, Issue 1," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 5(1), pages 180-180, June.
    9. Bussolo, Maurizio & De Hoyos, Rafael E. & Medvedev, Denis, 2008. "Is the developing world catching up ? global convergence and national rising dispersion," Policy Research Working Paper Series 4733, The World Bank.
    10. van Ruijven, Bas J. & O’Neill, Brian C. & Chateau, Jean, 2015. "Methods for including income distribution in global CGE models for long-term climate change research," Energy Economics, Elsevier, vol. 51(C), pages 530-543.
    11. Tapias, J., 2021. "Temporary employment, informality, poverty and inequality," Documentos de trabajo - Alianza EFI 20047, Alianza EFI.
    12. Thomas W. Hertel & Jeffrey J. Reimer, 2006. "Predicting the Poverty Impacts of Trade Reform," QA - Rivista dell'Associazione Rossi-Doria, Associazione Rossi Doria, issue 2, May.
    13. McDonald, Scott. & Jansen, Marion. & Uexküll, Erik von., 2012. "The impact of crisis-related changes in trade flows on employment, incomes, regional and sectoral development in Brazil," ILO Working Papers 994689023402676, International Labour Organization.
    14. Julien Lefevre, 2018. "Modeling the Socioeconomic Impacts of the Adoption of a Carbon Pricing Instrument – Literature review," CIRED Working Papers hal-03128619, HAL.
    15. Bussolo, Maurizio & De Hoyos, Rafael E. & Medvedev, Denis & van der Mensbrugghe, Dominique, 2007. "Global growth and distribution : are China and India reshaping the world?," Policy Research Working Paper Series 4392, The World Bank.
    16. Bussolo, Maurizio & De Hoyos, Rafael & Medvedev, Denis, 2008. "Global Income Distribution and Poverty in the Absence of Agricultural Distortions," Conference papers 331764, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    17. Bosello, Francesco & Eboli, Fabio & Parrado, Ramiro & Rosa, Renato, 2010. "REDD in the Carbon Market: A general equilibrium analysis," Conference papers 331978, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    18. Nicolas Hérault, 2009. "Sequential Linking of Computable General Equilibrium and Microsimulation Models," Melbourne Institute Working Paper Series wp2009n02, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.

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