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Globalisation and Poverty in Latin America: Some Channels and Some Evidence
Author(s) -
Porto Guido G.
Publication year - 2007
Publication title -
world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/j.1467-9701.2007.01050.x
Subject(s) - economics , poverty , latin americans , liberalization , globalization , welfare , unemployment , agriculture , population , computable general equilibrium , international economics , indigenous , development economics , labour economics , economic growth , macroeconomics , market economy , geography , political science , demography , archaeology , sociology , law , ecology , biology
This paper provides an overview of the main mechanisms through which globalisation can affect poverty and household welfare in Latin America and presents supporting evidence from different case studies in the region. One case study explores the impacts of agricultural trade liberalisation in world markets on poverty in Argentina, with an emphasis on labour income effects via real wages. The second case study examines the impacts of CAFTA on net producers and net consumers among the indigenous population in Guatemala. The analysis explores short‐run impacts as well as medium‐run impacts as households adjust farm decisions. Finally, a last exercise is set up to study the role of agricultural liberalisation on wages, employment and unemployment when there are frictions in labour markets. These case studies show that the impacts of trade on developing countries are heterogeneous. In Argentina, there are gains from liberalisation of world agriculture and higher food prices. In Guatemala, instead, the indigenous population would benefit from lower food prices. It is clear that household adjustments and complementary factors are fundamental ingredients of any reasonable evaluation of the welfare impacts of trade reforms.