Hostname: page-component-586b7cd67f-t7czq Total loading time: 0 Render date: 2024-11-20T09:30:59.630Z Has data issue: false hasContentIssue false
  • English
  • Français

The Socioeconomic and environmental effects of free trade agreements: a dynamic CGE analysis for Chile

Published online by Cambridge University Press:  03 August 2010

RAÚL O'RYAN ,
CARLOS J. DE MIGUEL ,
SEBASTIAN MILLER  and
MAURICIO PEREIRA
RAÚL O'RYAN
Affiliation:
United Nations Development Programme, Dag Hammarskjöld 3241, Santiago, Chile, and Centro de Economía Aplicada, FCFM, Universidad de Chile. Tel: +56-2-654-1012. Email: [email protected]
CARLOS J. DE MIGUEL
Affiliation:
United Nations Economic Commission for Latin America and the Caribbean, Santiago, Chile. Email: [email protected]
SEBASTIAN MILLER
Affiliation:
Inter American Development Bank, Washington, D.C., USA. Email: [email protected]
MAURICIO PEREIRA
Affiliation:
United Nations Economic Commission for Latin America and the Caribbean, Santiago, Chile. Email: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

This paper undertakes a quantitative analysis of the socioeconomic and environmental impacts of different trade agreements for Chile. A dynamic general equilibrium model is used to compare the consequences of unilateral liberalization and trade agreements with the European Union (EU) and the United States (USA). The results show that economic gains under the trade agreements are only significant if foreign investment increases or value added taxes are modified. Winners and losers depend on the agreement; however, unskilled labor-intensive sectors always progress. Consequently, these agreements seem to be good for the poorest groups. Some natural resource intensive sectors significantly increase their production with the EU and the US agreements, also increasing the environmental pressures. CO2 and PM-10 emissions are not very different under these agreements as compared to business as usual – under which environmental pressures increase significantly. The results show the importance of economy-wide analysis of trade agreements in developing contexts.

Type
Research Article
Information
Environment and Development Economics , Volume 16 , Special Issue 3: CRITICAL ENVIRONMENTAL AND DEVELOPMENT ISSUES IN LATIN AMERICA , June 2011 , pp. 305 - 327
Copyright
Copyright © Cambridge University Press 2010

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Baldwin, R. and Martin, P. (1999), ‘Two waves of globalization: superficial similarities, fundamental differences’, National Bureau of Economic Research Working Paper No. 6904, Cambridge, MA.CrossRefGoogle Scholar
Beghin, J., Bowland, B., Dessus, S., Roland-Holst, D., and Van Der Mensbrugghe, D. (2002), ‘Trade integration, environmental degradation and public health in Chile: assessing the linkages’, Environment and Development Economics 7: 241–267.CrossRefGoogle Scholar
Beghin, J., Dessus, S., Roland-Holst, D., and Van Der Mensbrugghe, D. (1996), ‘General Equilibrium Modelling of Trade and The Environment’, Technical Paper No. 116, OECD Development Center, Paris.Google Scholar
Cabezas, M. (2003), ‘Tratado de Libre Comercio entre Chile y Estados Unidos: Revisión de estudios que cuantifican su impacto’, Central Bank of Chile Working Paper No. 239, Santiago, Chile.Google Scholar
Canes, M.E. (2000), ‘Country impacts of multilateral oil sanctions’, Contemporary Economic Policy 18: 135–144.CrossRefGoogle Scholar
Carriquiry, B. (2008), ‘Calidad de la estimación de las emisiones contaminantes en el modelo de equilibrio general computable ECOGEM. Cuales con sus consecuencias de los efectos económicos y medioambientales predichos por el modelo?’, Master's thesis, University of Chile, Santiago, Chile.Google Scholar
Central Bank of Chile (2003), Matriz de Insumo Producto para la Economía Chilena: 1996, Santiago: Chile.Google Scholar
Coeymans, J.E. and Larraín, F. (1994), ‘Efectos de un acuerdo de libre comercio entre Chile y Estados Unido: un enfoque de equilibrio general’, Cuadernos de Economía 31: 357–399.Google Scholar
Cogneau, D. and Tapinos, G. (1995), ‘Libre-échange, repartition du revenu et migrations au Maroc’, Revue d'Economie du Developpement 1: 27–52.Google Scholar
Decreux, Y., Guérin, J.-L., and Jean, S. (2003), ‘Trade and relative wages: what can we learn from CGE models?’, Integration and Trade 18: 33–57.Google Scholar
Dessus, S., Roland-Holst, D., and Van Der Mensbrugghe, D. (1994), ‘Input-based pollution estimates for environmental assessment in developing countries’, Technical Paper No. 1001, OECD Development Center, Paris.Google Scholar
Diao, X., Diaz-Bonilla, E., and Robinson, S. (2002), ‘Scenarios for trade integration in the Americas’, Integration and Trade 17: 31–52.Google Scholar
Diao, X., Yeldan, E., and Roe, T. (1998), ‘A simple dynamic applied general equilibrium model of a small open economy: transitional dynamics and trade policy’, Journal of Development Economics 23: 77–101.Google Scholar
ECLAC (Economic Commission for Latin America and the Caribbean) (2006), ‘Latin America and the Caribbean in the World Economy: 2005–2006’, United Nations publication, Santiago, Chile.Google Scholar
Gale, L. (1994), ‘Environmental patterns from free trade: implications from dynamics NAFTA models of Mexico’, Journal of Energy and Development 20: 129–145.Google Scholar
Gilbert, J. (2003), ‘Trade liberalization and employment in developing economies of the Americas’, Integration and Trade 18: 13–32.Google Scholar
Harrison, G.W., Rutherford, T.F., and Tarr, D.G. (2003), ‘Chile's regional arrangements: the importance of market access and lowering the tariff to six percent’, Central Bank of Chile Working Paper No. 238, Santiago, Chile.Google Scholar
Holland, D., Figueroa, E., Alvarez, R., and Gilbert, J. (2005), ‘Imperfect labor mobility, urban unemployment and agricultural trade reform in Chile’, in Chumacero, R. and Schmidt Hebbel, K. (eds), General Equilibrium Models for the Chilean Economy, Central Bank of Chile, Santiago, Chile.Google Scholar
Monteagudo, J. and Watanuki, M. (2002), ‘Regional trade arrangements for MERCOSUR: the FTAA and the FTA with the European Union’, Integration and Trade 17: 53–78.Google Scholar
O'Ryan, R., de Miguel, C.J., Miller, S., and Lagos, C. (2002), ‘A Social Accounting Matrix for Chile: 2001’, mimeo, Universidad de Chile, Instituto de Asuntos Públicos.Google Scholar
O'Ryan, R., de Miguel, C.J., Miller, S., and Munasinghe, M. (2005), ‘Computable general equilibrium model analysis of economywide cross effects of social and environmental policies in Chile’, Ecological Economics 54: 447–472.CrossRefGoogle Scholar
O'Ryan, R., de Miguel, C.J., Pereira, M. and Lagos, C. (2008), ‘Economic and social impacts of energy shocks: a general equilibrium analysis for Chile’, Central Bank of Chile Working Paper No. 466, Santiago, Chile.Google Scholar
O'Ryan, R., Miller, S., and de Miguel, C.J. (2003), ‘A CGE framework to evaluate policy options for reducing air pollution emissions in Chile’, Environment and Development Economics 8: 285–309.CrossRefGoogle Scholar
Pereira, A.M. and Shoven, J.B. (1988), ‘Survey of dynamic computational general equilibrium models for tax policy evaluation’, Journal of Policy Modeling 10: 401–436.CrossRefGoogle Scholar
Restrepo, J. (2006), ‘Estimating NAIRU for Chile’, Central Bank of Chile Working Paper No. 361, Santiago, Chile.Google Scholar
Roland-Holst, D. and Van Der Mensbrugghe, D. (2002), ‘Trade liberalization in the Americas: are regionalism and globalization compatible?’, Integration and Trade 17: 13–30.Google Scholar
Rutherford, T. and Tarr, D.G. (2003), ‘Regional trading arrangements for Chile: do the results differ with a dynamic model?’, Economie Internationale, CEPII Research Center.Google Scholar
Schuschny, A., Durán, J.E., and de Miguel, C.J. (2008), ‘Política comercial de Chile y los TLC con Asia: evaluación de los efectos de los TLC con Japón y China’, Estudios estadísticos y prospectivos No. 66, Economic Commission for Latin America and the Caribbean.Google Scholar
Srinivasan, T.N. and Bhagwati, J.N. (1980), ‘Trade and welfare in a steady state’, in Chipman, J.S. and Kindleberger, C.P. (eds.), Flexible Exchange Rates and the Balance of Payments: Essays in Memory of Egon Sohmen, Amsterdam: North-Holland.Google Scholar
Storm, S. (1997). ‘Agriculture under trade policy reform: a quantitative assessment for India’, World Development 25: 425–436.CrossRefGoogle Scholar
Vennemo, H. (1997), ‘A dynamic applied general equilibrium model with environmental feedbacks’, Economic Modelling 14: 99–154.CrossRefGoogle Scholar
Zarazaga, C. (2000), ‘Measuring the benefit of unilateral trade liberalization: dynamic models’, Economic and Financial Policy Review 1: 29–40.Google Scholar
Supplementary material: File

O'Ryan supplementary material

Appendices.doc

Download O'Ryan supplementary material(File)
File 309.2 KB