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Poverty impacts of trade integration with the European Union: lessons for Ecuador.

Santiago de Chile
Considered Countries: 
This research proposes to quantify the effects of a trade agreement with the European Union on
poverty in Ecuador. Both poverty and the signing of a trade agreement with the EU are issues under
discussion in Ecuador. Ecuador seeks to sign a trade agreement with the EU given their
complementarities in trade: the EU is a major market for Ecuadorian agricultural and fish products,
and Ecuador imports mainly manufacturing goods from the EU. In particular, the EU is the main
market for the main agricultural export product of Ecuador: bananas.
The transmission mechanisms to study these issues include changes in commodity prices, wages
and earnings, and labor market demands. This research combines a reduced-form micro household
income and occupational choice model with a standard single-country computable general equilibrium
model (CGE) for Ecuador. This study highlights that a trade agreement with the EU may have a different
impact on poverty depending on the degree of initial tariff reduction, on labor market considerations, and
on whether better access to Ecuadorian bananas is granted by the negotiations or not. Through trade
liberalization there is a significant increase in imports from the EU, particularly in protected sectors.
With better access for bananas to the EU market, investment constraints may mean that increasing export
and production of bananas can be achieved by pulling resources (namely production and labor) out from
other sectors. Nearly every scenario of trade agreement leads to a decline in extreme poverty in rural
regions. In contrast, extreme poverty in urban regions may increase.

The Euro Experience: A Review of the Euro Crisis, Policy Issues, Issues Going Forward and Policy Implications for Latin America

Washington DC
Volume, number, page: 
This policy brief reviews the experience of the countries under the Euro currency,
focusing on those that have been under significant pressure in recent years—
Greece, Ireland, Portugal and Spain, referred to as “emerging” economies. At
first they experienced stable growth and converged to the most advanced
countries, but subsequent adjustment has proven elusive due to macroeconomic
conditions, worsening structural deficiencies, and incomplete integration. The
conditions for the survival of the Euro zone are complex and still far from
fulfillment. While Latin America has recently experienced a similar period of
stable growth, there is no room for complacency. The main lesson from Europe’s
experience is that Latin America must take advantage of the current context of
growth, stability and optimism in order to carry out much-needed reforms that
will leave countries adequately prepared to face a downturn in the world


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