Static economic effects of alternative trade policy options: Unilateral and multilateral trade reforms

This thesis addresses main themes related with the economic effects of trade liberalization. The purpose is to provide new evidence from a general equilibrium perspective based on numerical assessments of alternative trade policy options in the context of unilateral and multilateral reforms. The motivation of this research is the recognition that although the idealized setting tariff structure for a small open economy is zero, it is not feasible in many developing countries where tariffs constitute a major source of government revenues. In this context we are left with partial trade reforms as a means to improve economic efficiency and welfare. However, working in a second best setting the effects are a priory ambiguous. Therefore, computation methods are needed to determine under which circumstances a trade reform is more likely to derive positive effects.; The main contributions of this thesis can be summarized as follows: (1) Provides systematic assessment of the economic consequences of tariff uniformity across a range of countries. (2) Presents new evidence from a general equilibrium perspective of the income distribution and employment effects of trade reform. (3) Assesses the effects of trade integration for the case of Central America, along with the analysis of important issues of regional trade like the consequences of the country size and the importance of trade with the countries forming the bloc. (4) Evaluates the consequences of rules of origin in free trade agreements, the case of Central America joining the North American Free Trade Area (NAFTA).; The analysis consists of static policy simulation using computable general equilibrium (CGE) models, which are numerically implemented with actual data from social accounting matrices. The basic assumptions are (i) constant returns to scale and perfect competition in production; and (ii) differentiated domestic and imported goods.; Chapter I examines welfare, income distribution and government revenue effects of unilateral trade reform in a small open economy model, the case of Panama.; Chapter II incorporates unemployment into the analysis of trade reform in Panama.; Chapter III analyzes welfare effects of replacing the existing tariff structure with uniform tariff in a multi-country study.; Chapter IV analyzes welfare effects of regional trade using multiregion models of two alternative integration schemes: Central American and Caribbean (referred as CAM) joining NAFTA and MERCOSUR.; Chapter V incorporates rules of origin into the analysis of regional integration in the case of CAM joining NAFTA, focussing on welfare and trade flows. (Abstract shortened by UMI.)...