Program Mentor: 
Alberto Valdes
Via Verde 9771
Vitacura, Santiago
Chile
+56-2-242-6070
Fax:+ 56-2-242-0960
E-Mail:

Research Proposal: I would like to study the rural poverty impacts of foreign trade agreements with main trade partners of Ecuador (e.g., with the United States), and alternative domestic support programs for farmers in Ecuador. To address this issue, I propose to apply a computable general equilibrium model specific for agriculture support, linked to a microsimulation model (of labor choice) of the Ecuadorian economy.

The FTAs should encourage more exports, investments, job creation and growth. But, not all sectors would gain with the FTA. Particularly in agricultural sectors, there would be winners and losers. The current government has proposed a plan to put in place subsidies for agricultural sectors that are expected to be negatively affected by the FTA (rice, soy, livestock, and maize). A key contribution to policy making in Ecuador is to appropriately measure the impacts of the FTA, and assess alternative measures to support sectors that would be challenged by an FTA with the United States. To do so, Ecuador needs analytical tools and suitable methodology.

The proposed method, a CGE model, should have key features that show policy instruments applied to agricultural trade and policy. Intermediate steps would involve the estimation of key parameters (elasticities and shares) needed to illustrate key relationships in a CGE model that focuses on agricultural trade and policy.

Another important issue in Ecuador is the impact of these policy changes on poverty. Ecuador is a country with high poverty rates. According to a World Bank poverty note published in 2005, 40 percent of the population in Ecuador lives in rural areas and 60 percent of this population is poor. I would like to address this issue and analyze the impact on rural poverty and income distribution that would take place after the FTAs are put in place. This issue could be addressed by linking Ecuador's CGE model (specific for agriculture support and trade policy simulation) to a microsimulation model of labor choice in Ecuador.