Agricultural trade liberalization and poverty in Brazil:

"This paper addresses the potential effects of a world agricultural trade liberalization scenario on poverty and regional income distribution in Brazil, using an interregional applied general equilibrium (AGE) and microsimulation model of Brazil, tailored for income distribution and poverty analysis. The model distinguishes 10 different labor types and 270 different household expenditure patterns. Income can originate from 41 different production activities (which produce 52 commodities), located in 27 states in the country. The AGE model is linked to a microsimulation model that includes 112,055 Brazilian households and 263,938 adults. The scenario is generated from a previous run of the MIRAGE model, which assesses the likely impacts of a Doha Development Agenda agreement, based on the draft on agriculture by Crawford Falconer and the draft on nonagricultural market access by Don Stephenson. The results of this global scenario are transmitted to the Brazilian model. Poverty and income distribution indexes are computed over the entire sample of households and persons, before and after the introduction of policy shocks. Model results show that the simulated trade policy shocks have positive effects on poverty and income distribution in Brazil. The simulated effects on poverty and income distribution are positive in aggregate, with benefits concentrated in the poorest households. The results, however, differ across the Brazilian territory, worsening in some important states, where the poverty and inequality indicators increase. The gains in agriculture are found to benefit all the agents involved, from workers to small producers to large farmers, rejecting the idea that just large farmers would gain." from authors' abstractEconomic integration, Poverty, Income distribution, Globalization, Markets, trade,

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.

Static strings in Randall-Sundrum scenarios and the quark anti-quark potential

We calculate the energy of a static string in an AdS slice between two D3-branes with orbifold condition. The energy for configurations with endpoints on a brane grows linearly for large separation between these points. The derivative of the energy has a discontinuity at some critical separation. Choosing a particular position for one of the branes we find configurations with smooth energy. In the limit where the other brane goes to infinity the energy has a Coulombian behaviour for short separations and can be identified with the Cornell potential for a quark anti-quark pair. This identification leads to effective values for the AdS radius, the string tension and the position of the infrared brane. These results suggest an approximate duality between static strings in an AdS slice and a heavy quark anti-quark configuration in a confining gauge theory.Comment: More clarifications added, typos corrected. Results unchange

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.