Sánchez, Marco V.Vos, Rob2017-09-072017-09-072009-06https://hdl.handle.net/10986/28145The Doha round of multilateral trade negotiations stalled in 2008 owing in no small degree to a lack of agreement on the terms of substantially reducing trade-distorting support for agricultural products and to what extent this will be beneficial to developing countries. Nicaragua presents an interesting case in point, being one of the poorest economies in Latin America with still a relatively large agricultural sector and high degrees of rural poverty. In 2005, the country signed a free trade agreement with the United States. This chapter provides a quantitative analysis addressing that question. It does so using a computable general equilibrium (CGE) model for Nicaragua coupled with a micro-simulation methodology. The first section provides background information on trade reform policies and macroeconomic trends in Nicaragua, with special reference to the agricultural sector and rural poverty. The section that follows describes the main features of the CGE model and the micro-simulation methodology used to assess the impact on poverty and inequality. The author then lay out the model scenarios considered, which include liberalizations of agricultural and all merchandise goods trade by the rest of the world and by Nicaragua itself. That is followed by a summary analysis of results. This analysis includes tests for the sensitivity of the results with respect to assumptions regarding the responsiveness of trade to price liberalization, as identified through the relevant trade elasticities. The final section provides conclusions and possible policy implications.en-USCC BY 3.0 IGOAGGREGATE IMPORTSAGRICULTURAL COMMODITIESAGRICULTURAL INCENTIVESAGRICULTURAL INCOMESAGRICULTURAL MARKETSAGRICULTURAL PRODUCTIONAGRICULTURAL PRODUCTSAGRICULTURAL SUPPORTAGRICULTURAL TRADEAGRICULTURAL TRADE LIBERALIZATIONAGRICULTUREAPPARELAVERAGE TARIFFBASE YEARBILATERAL AGREEMENTSBILATERAL TRADECAPITAL FLOWSCAPITAL GOODCAPITAL GOODSCAPITAL INFLOWSCAPITAL MARKETCAPITAL STOCKCAPITAL STOCKSCDCENTRAL BANKCIVIL WARCOMMODITIESCOMMODITYCOMMODITY PRICECOMMODITY PRICESCOMMON MARKETCONSUMER PRICE INDEXCONSUMER PRICESCONSUMERSCOUNTERFACTUAL SIMULATIONSCURRENT ACCOUNTCURRENT ACCOUNT BALANCECUSTOMS PROCEDURESDEFLATORSDEMAND FOR CAPITALDEMOGRAPHICDEMOGRAPHIC CHANGEDEVELOPING COUNTRIESDEVELOPMENT ASSISTANCEDEVELOPMENT ECONOMICSDEVELOPMENT POLICYDOMESTIC MARKETDOMESTIC MARKETSDOMESTIC PRICEDOMESTIC PRICESDOMESTIC PRODUCERSDOMESTIC PRODUCTIONECONOMIC INTEGRATIONECONOMIC SECTORSECONOMIC WELFAREELASTICITYENDOGENOUS VARIABLESEPZEQUILIBRIUMEXCHANGE RATEEXOGENOUS VARIABLESEXPORT COMMODITYEXPORT EARNINGSEXPORT GROWTHEXPORT PRICEEXPORT PRICESEXPORT PROCESSINGEXPORT PROCESSING ZONEEXPORT SUBSIDIESEXPORT SUPPLYEXPORT TAXESEXPORTERSEXPORTSEXPOSUREEXTERNAL TERMS OF TRADEEXTREME POVERTYFACTORS OF PRODUCTIONFINANCIAL INSTITUTIONSFISCAL DEFICITFIXED INVESTMENTFOREIGN CURRENCYFOREIGN DIRECT INVESTMENTFREE ACCESSFREE TRADEFREE TRADE AGREEMENTGDPGENERAL EQUILIBRIUMGENERAL EQUILIBRIUM ANALYSISGINI COEFFICIENTGLOBAL COMPETITIONGLOBAL TRADEGLOBAL TRADE ANALYSISGROSS DOMESTIC PRODUCTGROWTH RATEGROWTH RATESHUMAN CAPITALIMPACT OF TRADEIMPACT OF TRADE LIBERALIZATIONIMPORTIMPORT COMPETITIONIMPORT CONTENTIMPORT DUTIESIMPORT PRICESIMPORT PROTECTIONIMPORT TARIFFIMPORT TARIFFSINCOMEINCOME LEVELSINCOMESINDEXATIONINDUSTRIAL PRODUCTSINVENTORYLABOR MARKETLABOR MARKET ADJUSTMENTLABOR MARKET OUTCOMESLABOR MARKET STRUCTURELABOR MARKETSLIBERALIZATION OF TRADELIBERALIZATIONSLIVING STANDARDSLOCAL CURRENCYMACROECONOMIC INSTABILITYMACROECONOMIC POLICIESMARGINAL PROPENSITY TO SAVEMARKET ACCESSMARKET CONDITIONSMARKET PRICESMARKET STRUCTUREMARKET STRUCTURESMONOPOLIESMULTILATERAL TRADEMULTILATERAL TRADE LIBERALIZATIONNET CAPITALOUTPUTPER CAPITA INCOMEPOPULATION AGEINGPOVERTY REDUCTIONPREFERENTIAL ACCESSPREFERENTIAL MARKET ACCESSPRICE DISTORTIONSPRICE LIBERALIZATIONPRICE SUPPORTPRIMARY GOODSPRIVATE INVESTMENTPRIVATE SAVINGSPRODUCTION COSTSPRODUCTIVITYPRODUCTIVITY GROWTHPROFIT MAXIMIZATIONPROTECTION DATAPROTECTION STRUCTUREPUBLIC UTILITYQUANTITATIVE RESTRICTIONSQUOTASRATE OF GROWTHREAL EXCHANGE RATEREAL GDPREAL WAGE GROWTHREGIONAL TRADERULES OF ORIGINRURAL INFRASTRUCTURESAFEGUARD MEASURESSAVINGSSKILLED WORKERSTARIFF RATETARIFF RATESTARIFF REDUCTIONTARIFF REDUCTIONSTARIFF REVENUESTARIFFS ON IMPORTSTAXTAX RATETAX RATESTAXATIONTERMS OF TRADETOTAL EXPORTSTOTAL FACTOR PRODUCTIVITYTRADE BALANCETRADE BARRIERSTRADE DEFICITTRADE EFFECTSTRADE FLOWSTRADE LIBERALIZATIONTRADE MODELSTRADE NEGOTIATIONSTRADE OPENINGTRADE OPENNESSTRADE POLICIESTRADE POLICYTRADE PREFERENCESTRADE PROTECTIONTRADE REFORMTRADE SHOCKTRADE SHOCKSTRADE STRUCTURETRADE TAXTRADE TAXESTRADING PARTNERTRADING PARTNERSUNEMPLOYMENTUNEMPLOYMENT RATEUNEMPLOYMENT RATESUNILATERAL LIBERALIZATIONUNILATERAL TRADEUNILATERAL TRADE LIBERALIZATIONUNSKILLED WORKERSVALUE ADDEDVALUE OF EXPORTSVALUE OF IMPORTSVOLATILITYWAGE GROWTHWAGESWELFARE GAINSWORLD DEVELOPMENT INDICATORSWORLD MARKETWORLD MARKETSWORLD PRICESWORLD TRADEWTOWorking PaperWorld Bank10.1596/28145