Munich Personal RePEc Archive

Can trade liberalization lead to an increase in poverty in Central America?

Moore, Robert E. (1990): Can trade liberalization lead to an increase in poverty in Central America? Published in: Journal of Economic Development , Vol. 15 (19, No. 2 (December 1990): pp. 83-92.

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Abstract

A stylized Central American trade model is used to demonstrate that trade liberalization can cause an increase in poverty. The paper used a straight-forward 3x3 small-country trade model. In the general case the 3x3 model will not yield signable results. In this paper constraints that are consistent with stylizations for Central American economies provide enough structure to give signable results for the effects of trade policy changes on factor prices. The stylized economy is modeled to have a manufacturing sector, an agricultural export sector, and a traditional subsistence agricultural sector. This 3x3 model is much more appropriate for analysis of trade policy in Central America than the standard 2x2 model.

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