Regional Inequality, Poverty and Economic Integration in Brazil.

Gains and losses from trade liberalization are often unevenly distributed inside a country. For example, if budget shares vary according to household income, changes in commodity prices will redistribute an overall welfare change between household types. Household incomes will also be differentially affected. Sectoral differences in factor-intensity mean that changes in industrial structure cause redistribution of income between primary factors. Particular primary factors (such as capital, or less skilled labour) may contribute disproportionately to the incomes of certain household types. The fortunes of such households indirectly depend on the prospects of particular sectors. We emphasize these distributive issues, especially those arising from the income side. At the same time we distinguish households by regions (within the country). The regional distinction sharpens the contrast between groups of households. Particular regions have their own patterns of economic activity and so are differently affected by changes in the industrial protection structure. Since regional household incomes depend closely on value-added from local industries, economic change will tend to redistribute income between regional households. If the regional concentration of poverty is more than we could predict by regional primary factor endowments and industry structure, the addition of a regional dimension will add power to our analysis of income distribution beyond the mere addition of interesting regional detail. The paper deals with these issues more fully. We extend previous regional modeling of Brazil to include the intra-household dimension, addressing poverty and income distribution issues that may be caused by trade integration. An applied general equilibrium (AGE) inter-regional model of Brazil underlies our analysis, with a detailed specification of households. The model is static and solved with GEMPACK. The Representative Household (RH) hypothesis is abandoned; instead a micro-simulation (MS) model is used to track changes in household income and expenditure patterns. This micro-simulation model is built upon two Brazilian household studies: (1) the Household Budget Survey (POF, IBGE, 1999) covers detailed expenditure patterns for 16,013 households and 11 regions in Brazil in 1996; (2) the National Household Sample Survey (PNAD, IBGE, 1997) is a yearly survey that includes detailed information about household employment and income sources, with 331,263 observations. We integrate the two data sources to produce a detailed mapping of expenditure and income sources for 250,000 Brazilian households, distinguishing 50 activities, 80 commodities, and 27 regions. We link the AGE and MS models together, solving them iteratively to get consistency between results. After a shock the AGE model communicates changes in wages and employment by industry and labour type to the MS model that individually simulates the changes in employment, income and expenditure patterns for each household. The new expenditure pattern is then communicated to the AGE model, and the process is repeated until the two models converge. The final results from the MS model enable us to estimate changes in poverty and income distribution measures, both nationally and for regions within Brazil. We use the model to analyze poverty and income distribution impacts of the Free Trade Area of Americas formation upon the Brazilian economy. In the particular simulation we examine, freer trade leads to increased employment, especially for lower-paid workers. Poor households, which contain more enemployed adults, benefit most. This leads to a reduction in poverty in all 27 Brazilian states.

Would Trade Liberalization Help the Poor of Brazil?

This paper addresses the potential effects of world agricultural trade liberalization on poverty and regional income distribution in Brazil, using an inter-regional applied general equilibrium (AGE) and a micro-simulation model of Brazil tailored for income distribution and poverty analysis by using a detailed representation of households. The model distinguishes 10 different labor types and has 270 different household expenditure patterns. Income can originate from 41 different production activities located in 27 different regions in the country. The AGE model communicates to a micro-simulation model that has around 112,000 Brazilian households and 264,000 adults. Poverty and income distribution indices are computed over the entire sample of households and persons, before and after the policy shocks. The simulated trade liberalization scenario causes agriculture to expand considerably and so, given the importance that agriculture still has for the poorest in Brazil, it has positive impacts on poverty in Brazil. The only states which show an increase in the number of poor households are Sao Paulo and Rio de Janeiro, where the bulk of the manufacturing activities in Brazil are concentrated. There is an even more positive impact on inequality. The higher fall in the poverty gap is shown to occur mainly on the poorest household groups, suggesting that the poorest among Brazil’s poor would benefit more from global trade liberalization.Distorted incentives, agricultural and trade policy reforms, national agricultural development, Agricultural and Food Policy, International Relations/Trade, F13, F14, Q17, Q18,

The Doha Round, poverty, and regional inequality in Brazil

This paper addresses the potential effects of the Doha round of trade negotiations on poverty and income distribution in Brazil, using an applied general equilibrium (AGE) and micro-simulation model of Brazil tailored for income distribution and poverty analysis. Of particular importance is the fact that the representative household hypothesis is replaced by a detailed representation of households. The model distinguishes 10 different labor types and has 270 different household expenditure patterns. Income can originate from 41 different production activities (which produce 52 commodities), located in 27 different regions in the country. The AGE model communicates to a micro-simulation model that has 112,055 Brazilian households and 263,938 adults. Poverty and income distribution indices are computed over the entire sample of households and persons, before and after the policy shocks. Model results show that even important trade policy shocks, such as those applied in this study, do not generate dramatic changes in the structure of poverty and income distribution in the Brazilian economy. The simulated effects on poverty and income distribution are positive, but rather small. The benefits are concentrated in the poorest households.Environmental Economics&Policies,Economic Theory&Research,Poverty Assessment,Inequality,Services&Transfers to Poor

Ethanol expansion and indirect land use change in Brazil

In this paper we analyze the Indirect Land Use Change (ILUC) effects of ethanol production expansion in Brazil through the use of an inter-regional, bottom-up, dynamic general equilibrium model calibrated with the 2005 Brazilian I-O table. A new methodology to deal with ILUC effects is developed, using a transition matrix of land uses calibrated with Agricultural Censuses data. Agriculture and land use are modeled separately in each of 15 Brazilian regions with different agricultural mix. This regional detail captures a good deal of the differences in soil, climate and history that cause particular land to be used for particular purposes. Brazilian land area data distinguish three broad types of agricultural land use, Crop, Pasture, and Plantation Forestry. Between one year and the next the model allows land to move between those categories, or for Unused land to convert to one of these three, driven initially by the transition matrix, changing land supply for agriculture between years. The transition matrix shows Markov probabilities that a particular hectare of land used in one year for some use would be in an other use next period. These probabilities are modified endogenously in the model according to the average unit rentals of each land type in each region. A simulation with ethanol expansion scenario is performed for year 2020, in which land supply is allowed to increase only in states located on the agricultural frontier. Results show that the ILUC effects of ethanol expansion are of the order of 0.14 hectare of new land coming from previously unused land for each new hectare of sugar cane. This value is higher than values found in the Brazilian literature. ILUC effects for pastures are around 0.47. Finally, regional differences in sugarcane productivity are found to be important elements in ILUC effects of sugar cane expansion.

About Trees and People. What Works for Development, Employment and the Environment in the Brazilian Amazon?

El presente artículo contribuye a la controversia sobre los modelos de desarrollo en la región Amazónica, aprovechando los descubrimientos de los modelos macroeconómicos de alta resolución. Una Matriz de Contabilidad Social para el bosque amazónico y un Modelo Computable de Equilibrio General revelan nuevos hechos y perspectivas para la formulación de políticas. Muchas más personas de lo que se pensaba se ganan la vida en base a los bosques de la Amazonia. Más de 525.000 trabajadores (de trabajo a tiempo completo) encontraron empleo directo en la cosecha y la fabricación de productos forestales en 2005 y 115.000 en la pesca de río. Los cultivos agrícolas y la cría de ganado tienen mayor tasa de empleo en la Amazonia que los bosques, pero los tres sectores ofrecen ingresos muy bajos. Estas actividades tampoco son mejores que la forestal para estimular el crecimiento económico. Un ejemplo de esto es que el coste de una política de deforestación cero para alcanzar las metas brasileñas de cambio climático provocaría pérdidas de solo el 0.62% del PIB nacional acumulado en 2030. Estas pérdidas, no obstante, recaerían en la frontera agrícola, en los trabajadores de baja calificación y en las familias pobres. Esto requiere medidas para lograr una transición justa tal como la estipulada en el Acuerdo del Clima de París, que fue promovido por la OIT. Las políticas deberían estimular el desarrollo económico local, aprovechando el alto potencial del uso sostenible de bosques y de la pesca de río para agregar valor a lo local. El aumento de la productividad del uso del suelo y del trabajo, además de la transformación de las respectivas cadenas de valor, serán fundamentales para mejorar la renta y lograr que el potencial de la región prospere como una economía verde.O presente artigo contribui para com a controversa sobre modelos de desenvolvimento para a Amazônia brasileira, aproveitando descobertas de modelos macroeconômicos de alta resolução. Uma Matriz de Contabilidade Social para a floresta amazônica e um Modelo de Equilíbrio Geral Computável revelam fatos novos y perspectivas para a formulação de politicas. Muito mais pessoas ganham a sua vida no uso da floresta amazônica do que se pensava. Mais de 525.000 trabalhadores (equivalentes de trabalho a tempo completo) estavam empregados na colheita y fabricação de produtos florestais e outros 115.000 na pesca de rio. Cultivos agrícolas e a pecuária são empregadores maiores na Amazônia que a floresta, mas os três setores oferecem rendas muito baixas. As outras atividades também não são melhores para estimular o crescimento econômico. Um desdobramento disso é que uma politica de desmatamento zero para cumprir as metas brasileiras de mudança climática provocaria uma perdida de apenas 0.62% do PIB nacional cumulativo ao 2030. Essas perdas, porém, recaem na fronteira agrícola, nos trabalhadores menos qualificados e em famílias pobres. Isso requer medidas para alcançar uma transição justa tal como estipulada no Acordo de Paris sobre o Clima e promovido pela OIT. As políticas deveriam estimular um desenvolvimento econômico local, aproveitando o alto potencial do uso sustentável da floresta e da pesca de rio de agregar valor localmente. Aumentos da produtividade do uso do solo e do trabalho tal como a transformação das cadeias de valor relacionadas serão fundamentais para melhorar renda e realizar o potencial da região de prosperar numa economia verde.This paper contributes to the controversy about development models for the Amazon region, using insights from high-resolution macro-economic models. A Social Accounting Matrix for the Amazon forest and a Computable General Equilibrium Model reveal new and surprising facts and perspectives for policy making. Many more people earn their livelihood from forests in the Amazon than previously thought. Over 525,000 workers (full-time equivalents) were directly employed in forest products harvesting and processing in 2005, and 115,000 in fishing in rivers. Farming and cattle rearing are bigger employers in the Amazon than forests, but incomes are very low for workers in all three sectors. Those activities are also not better than forestry in terms of stimulating growth. One corollary is that even a zero-deforestation policy to meet Brazil´s climate targets would only lead to 0.62% losses of national GDP accumulated until 2030. The losses would, however, be concentrated in the agricultural frontier and in low skilled workers and poorer families. This calls for measures to achieve a just transition as stipulated in the Paris Climate Agreement and promoted by the ILO. Policy should stimulate local economic development, building on the high potential of sustainable forest use and river fishing for local value addition. Improvements in the productivity of land-use and labor as well as transformations of related value chains will be paramount to improve incomes and realize the potential of the region to prosper in a green economy

De árvores e pessoas. O que funciona para o desenvolvimento, trabalho e meio ambiente na Amazônia brasileira?

El presente artículo contribuye a la controversia sobre los modelos de desarrollo en la región Amazónica, aprovechando los descubrimientos de los modelos macroeconómicos de alta resolución. Una Matriz de Contabilidad Social para el bosque amazónico y un Modelo Computable de Equilibrio General revelan nuevos hechos y perspectivas para la formulación de políticas. Muchas más personas de lo que se pensaba se ganan la vida en base a los bosques de la Amazonia. Más de 525.000 trabajadores (de trabajo a tiempo completo) encontraron empleo directo en la cosecha y la fabricación de productos forestales en 2005 y 115.000 en la pesca de río. Los cultivos agrícolas y la cría de ganado tienen mayor tasa de empleo en la Amazonia que los bosques, pero los tres sectores ofrecen ingresos muy bajos. Estas actividades tampoco son mejores que la forestal para estimular el crecimiento económico. Un ejemplo de esto es que el coste de una política de deforestación cero para alcanzar las metas brasileñas de cambio climático provocaría pérdidas de solo el 0.62% del PIB nacional acumulado en 2030. Estas pérdidas, no obstante, recaerían en la frontera agrícola, en los trabajadores de baja calificación y en las familias pobres. Esto requiere medidas para lograr una transición justa tal como la estipulada en el Acuerdo del Clima de París, que fue promovido por la OIT. Las políticas deberían estimular el desarrollo económico local, aprovechando el alto potencial del uso sostenible de bosques y de la pesca de río para agregar valor a lo local. El aumento de la productividad del uso del suelo y del trabajo, además de la transformación de las respectivas cadenas de valor, serán fundamentales para mejorar la renta y lograr que el potencial de la región prospere como una economía verde.This paper contributes to the controversy about development models for the Amazon region, using insights from high-resolution macro-economic models. A Social Accounting Matrix for the Amazon forest and a Computable General Equilibrium Model reveal new and surprising facts and perspectives for policy making. Many more people earn their livelihood from forests in the Amazon than previously thought. Over 525,000 workers (full-time equivalents) were directly employed in forest products harvesting and processing in 2005, and 115,000 in fishing in rivers. Farming and cattle rearing are bigger employers in the Amazon than forests, but incomes are very low for workers in all three sectors. Those activities are also not better than forestry in terms of stimulating growth. One corollary is that even a zero-deforestation policy to meet Brazil´s climate targets would only lead to 0.62% losses of national GDP accumulated until 2030. The losses would, however, be concentrated in the agricultural frontier and in low skilled workers and poorer families. This calls for measures to achieve a just transition as stipulated in the Paris Climate Agreement and promoted by the ILO. Policy should stimulate local economic development, building on the high potential of sustainable forest use and river fishing for local value addition. Improvements in the productivity of land-use and labor as well as transformations of related value chains will be paramount to improve incomes and realize the potential of the region to prosper in a green economyO presente artigo contribui para com a controversa sobre modelos de desenvolvimento para a Amazônia brasileira, aproveitando descobertas de modelos macroeconômicos de alta resolução. Uma Matriz de Contabilidade Social para a floresta amazônica e um Modelo de Equilíbrio Geral Computável revelam fatos novos y perspectivas para a formulação de politicas. Muito mais pessoas ganham a sua vida no uso da floresta amazônica do que se pensava. Mais de 525.000 trabalhadores (equivalentes de trabalho a tempo completo) estavam empregados na colheita y fabricação de produtos florestais e outros 115.000 na pesca de rio. Cultivos agrícolas e a pecuária são empregadores maiores na Amazônia que a floresta, mas os três setores oferecem rendas muito baixas. As outras atividades também não são melhores para estimular o crescimento econômico. Um desdobramento disso é que uma politica de desmatamento zero para cumprir as metas brasileiras de mudança climática provocaria uma perdida de apenas 0.62% do PIB nacional cumulativo ao 2030. Essas perdas, porém, recaem na fronteira agrícola, nos trabalhadores menos qualificados e em famílias pobres. Isso requer medidas para alcançar uma transição justa tal como estipulada no Acordo de Paris sobre o Clima e promovido pela OIT. As políticas deveriam estimular um desenvolvimento econômico local, aproveitando o alto potencial do uso sustentável da floresta e da pesca de rio de agregar valor localmente. Aumentos da produtividade do uso do solo e do trabalho tal como a transformação das cadeias de valor relacionadas serão fundamentais para melhorar renda e realizar o potencial da região de prosperar numa economia verde

ECONOMIA DE ESCALA NA PRODUÇÃO DE SOJA NO BRASIL

Com o intuito de atender uma demanda interna e externa crescente, a produção de soja tem se expandido. Nos estados do centro-oeste, observa-se que produtores possuem áreas de terra maiores e produzem em maior escala. A evolução dos dados dos censos agropecuários brasileiros mostra uma tendência de redução do número de pequenos estabelecimentos produtores de soja na região sul. Justifica-se assim o objetivo desse estudo de determinar o tamanho ótimo da atividade de produção de soja, a fim de inferir sobre a existência de economias de escala no setor. O referencial teórico é o da teoria da dualidade da função custo e de produção. Os dados foram obtidos através de uma pesquisa de campo, em uma amostra de duzentos e dezoito produtores de soja nos cinco principais estados produtores. As estimativas de economias de escala obtidas apontam uma escala ótima de produção de aproximadamente 9.000 toneladas de soja, que pode ser obtida em propriedades com aproximadamente 3.000 hectares de área de produção de soja. Os resultados sugerem que as economias de escala estejam determinando uma nova configuração para o setor de produção de soja no Brasil

Expansão do complexo sucroalcooleiro e suas implicações distributivas para o Brasil

A forte expansão projetada na produção, consumo e exportação de cana de açúcar no Brasil para os próximos anos é analisada neste artigo. As diferenças regionais na estrutura de demanda por trabalho na atividade produtiva de cana de açúcar são analisadas, diferenciando-se na análise as diferentes faixas de salário e regiões. Conclui-se que a forte expansão do complexo sucroalcooleiro brasileiro na direção das regiões sudeste e centro-oeste tornará a cultura cada vez menos importante na absorção da mão-de-obra em geral, mas principalmente da mão-de-obra pouco qualificada

Impactos econômicos da introdução do milho Bt11 no Brasil: uma abordagem de equilíbrio geral inter-regional

Este trabalho analisa os impactos econômicos da adoção do milho Bt11 no Brasil, bem como as consequências da proibição deste cultivo apenas no Paraná, caso a lei estadual nº 14.162/03 entrasse em vigor. Para tal, utiliza-se um modelo computável de equilíbrio geral inter-regional, calibrado para 2001, simulando a redução de inseticida, mão de obra, combustível e lubrificantes, bem como o aumento de produtividade observado em lavouras de milho Bt11. Ao analisar a adoção nas regiões brasileiras tecnificadas, observa-se o deslocamento de estoque de capital e mão de obra de todas as regiões para o Sul do País. Considerando-se que apenas o Paraná não adota milho Bt11, observa-se que tanto a mão de obra quanto o estoque de capital se deslocam do Sul e Sudeste para o Centro-Oeste do Brasil. Os resultados mais expressivos ocorrem no próprio estado do Paraná, onde não apenas o setor de milho, como também os setores a jusante perdem competitividade, reduzindo o nível de atividade, emprego e consumo das famílias. De forma geral, os efeitos da adoção do milho Bt11 são transmitidos ao longo da sua cadeia produtiva, gerando aumento do PIB, das exportações e do consumo das famílias, sendo mais expressivos nos setores e regiões diretamente relacionados com a cadeia de comercialização do milho, tais como os de criação animal e carnes, localizados, em sua maioria, no Sul do País.This study aims to analyze the economic impacts of the adoption of Bt11 corn in Brazil, as well as the consequences of the prohibition of the cultivation only in the Paraná state, if the state law number 14.162/03 would start to be active. For this purpose, an inter-regional general equilibrium computable model is used, gauged for 2001, simulating the reduction of insecticide, labor force, fuel and lubricants, as well as the increase in the yield observed in crops which use Bt11 corn. When the adoption of Bt11 corn in technified Brazilian regions is analyzed, the stock of capital and labor force moves from all regions to the South of the country. Taking into account that only Paraná state does not adopt the Bt11 corn, it is observed that both the labor force and the stock of capital move from the South and the Southeast to the Central-Western region of Brazil. The most expressive result takes place in the Paraná State, where not only the corn sector, but also downstream sectors lose competitiveness, reducing the level of activity, employment and household consumption. In general terms, the effects of the adoption of the Bt11 corn are transferred along its supply chain, increasing GDP, exports and household consumption. Results are more expressive in sectors and regions directly related to the corn supply chain, such as animal raising and meat, mostly located in the South of the country