Commodity prices have risen sharply since 2006. This may benefit developing countries specialized on primary exports, but poverty may increase. Uruguay is a net exporter of primary products and a net importer of oil. With the aim of analyzing the impact of soaring commodity prices and policy options, we apply a CGE model and microsimulations. A rise in food prices has a positive impact on the Uruguayan economy that is partially offset by the increase in oil prices. Even when poorest households’ income rises, their welfare falls because their consumption basket becomes more expensive. Poverty falls but extreme poverty increases. A policy of transfers to the poorest households seems to be the most efficient policy option to compensate poor households.

International Commodity Prices, Poverty Policies, Labor Issues, International Trade, Computable General Equilibrium Model.

Effects of the Completition of MERCOSUR on the Uruguayan Labor Market. A simulation exercies using a CGE model

The Mercosur was born as an imperfect Customs Union. During the transition phase to a complete Customs Union -starting in 1995-, each country established some exceptions to trade liberalization within the region and to the external common tariff. This paper deals with the possible effects on the Uruguayan labor market of the elimination of those exceptions. With that purpose, the changes in tariffs during the transition are simulated with a Computable General Equilibrium model. The model is specified for the Uruguayan economy but three other regions are considered: Argentina, Brazil and the rest of the world. There are nine sectors in the model, six of which are assumed to work under imperfect competition while the rest are perfectly competitive. In the sectors with imperfect competition a Bertrand type behavior is assumed. The labor market is segmented in skilled and unskilled labor and wages are flexible. The results show that the overall effects on the main variables and on the labor market are not important. The most significant changes are found in trade flows. However, at the sectoral level relevant changes are found in consumption, output, trade and factor allocation in those sectors that are most affected by the intra-zone liberalization or by the complete enforcement of the Common External Tariff.

Mercosur: un camino a la apertura o la consolidación de un bloque cerrado?

The MERCOSUR is an imperfect custom union whose Common External Tariff (CET) is lower than the one that each member applied before 1991. From 1990 to 1994 regional trade grew, and the patterns of trade changed. The aim of this paper is to analyze if the countries welfare and productive efficiency will improve, or if the productive inefficiency of each member will be protected because of MERCOSUR. In order to analyze this issue we perfomed three differents experiments using the GTAP a multicountry Applied General Equilibrium Model. The first experiment simulates a unilateral tariff reduction resembling the trade liberalization results of the CET. The second experiment supposes that the MERCOSUR countries remove all the tariffs on regional trade without changing the external tariffs. Finally, in the third experiment both policies are implemented. In the three experiments, regional trade increases as a consequence of trade liberalization inside a "natural block", as a MERCOSUR. Welfare in MERCOSUR countries also increases in the three experiments. The best policy for Argentina is unilateral trade liberalization, represented by the first experiment. However, the best one for Brazil, is the unilateral liberalization plus regional liberalization (represented by the third experiment).

Integración de las Américas: Impactos Globales y Sectoriales para el Mercosur

The purpose of the paper is to assess the costs and benefits of different integration options for the Mercosur with all other countries in the Americas. A multiregional, multisector CGE model is used to simulate the effects of several scenarios that are currently on debate. Alternative strategies are here analyzed: bilateral agreements of each of the Mercosur countries with the US; a South American Free Trade Area (SAFTA); and the Free Trade Area of the Americas (FTAA). Additionally, the paper compares the effects of agreements that lead to total trade liberalization with those that exclude the agricultural sector. The macro results of the simulations are negligible but they nevertheless indicate there is a significant impact on the specialization patterns of the Mercosur.

Mercosur: localización de la producción. Un modelo de geografía económica.

El MERCOSUR acuerda la eliminación de barreras al comercio entre países fronterizos que presentan una gran asimetría en su dimensión geográfica y económica y que se ubican a gran distancia de los centros económicos mundiales. A partir de variaciones sobre un modelo de equilibrio general estilizado se examinan posibles impactos de la conformación de un mercado común sobre la localización geográfica de la producción simulando distintos escenarios de apertura en un mundo formado por países y regiones naturales. Se trabaja con un modelo de competencia monopolística con economías de escala, diferenciación de productos y costos de transporte aplicado a un mundo en que existen dos sectores productivos, un único factor, tres países y cinco regiones naturales. La presencia de economías de escala y barreras al movimiento de bienes provocaría un "efecto-aglomeración" en torno a los mercados de mayor tamaño relativo provocando una especialización de las regiones menores en sectores sin economías de escala. Sin embargo, la trayectoria de especialización no es lineal. Su evolución y el equilibrio final con uno o varios centros industriales depende de la interacción entre el tamaño relativo de los mercados, los costos de transporte, los niveles de aranceles y el poder de mercado de las firmas.

La agenda externa del MERCOSUR: el impacto de negociaciones con el ALCA, la UE y la OMC

The objective of this paper is to contribute to the economic evaluation of the impact on the MERCOSUR countries of the outcomes of three simultaneous negotiations: the Free Trade Area of the Americas (FTAA), the free trade agreement with the European Union (EU) and the multilateral negotiations within the World Trade Organization (WTO). A quantitative evaluation has been done implementing different simulations with a multi country CGE Model, which include the four MERCOSUR partners. The paper concludes that the welfare impact on the MERCOSUR of these negotiations would be rather small and positive, except in the FTAA scenario where negative results are found for Argentina, Brazil and Paraguay. When the negotiations do not include the agricultural sector, the results become negative in most scenarios. The most significant effects of the negotiations would be an increase in trade and a reorientation in favor of the new partners, with detriment for intra- MERCOSUR trade. The difference between the trade effects in a full or a restricted agreement is remarkable for Argentina and Uruguay. In all scenarios MERCOSUR would increase its specialization on agriculture and food, especially in the case of full liberalization between MERCOSUR and the EU. Restricted agreements would neither avoid production decline in some industries nor improve traditional agricultural products and food industries so much as a non-restricted agreement.MERCOSUR, FTAA, WTO, EU, CGE, external negotiations.

Cambios en el patrón de especialización regional. Viejas ventajas comparativas y nuevas economías de escala.

This paper analysis new hypothesis about the effects off regional integration on the MERCOSUR countries. From characterizing the initial patterns of specialization, it discusses the relevance of centre-periphery agglomeration hypothesis. It argues that the economic integration could increase the specialization from comparative advantages but, when there are economies of scale, also could produce a relocalization in the geographic economic activity. The existence of economies of scale and transport cost imply that the relative market's size is relevant to determine the specialization. The geographic regions, that's to say economic space naturally integrate with low transport costs, turn up an significative category to stdy specialization issues. Uruguay, as an interior border of MERCOSUR, faces an privileged geography which could be its main advantage in the process of integration. This advantage appears, in the demand side and in the supply side, because its population can improve their utility for increase on consume variety, or through improving its efficiency for specialization.

Macroeconomic impacts of the reform of public services in Uruguay - A CGE analysis

This paper investigates the macroeconomic impacts of the reform of public services in Uruguay. A computable general equilibrium (CGE) model is used to simulate different policy scenarios, analyzing the reforms of the regulatory framework of public services, changes in their investment policies, modifications in the competitive environment and reforms in their tax structure. The results show that the macroeconomic effects of the proposed reforms are relatively small.Social Accounting Matrix, Computable General Equilibrium Models, public services, public sector reform.

Uruguay y el MERCOSUR frente a un acuerdo con la Unión Europea: prioridades para la negociación arancelaria

Incluye BibliografíaPagina nueva 2 En 1995 el MERCOSUR y la Unión Europea (UE) emprendieron el camino hacia la concreción de un acuerdo comercial entre ambas regiones. En el 2000 comenzaron las negociaciones bilaterales cuyo objetivo es alcanzar la liberalización gradual y recíproca del intercambio comercial. La concreción de este acuerdo no parece una tarea sencilla. Aún cuando promete fuertes beneficios derivados del aprovechamiento de ventajas comparativas, generaría resistencias de grupos de interés organizados. Para la UE las dificultades mayores se asocian al sector agrícola mientras que para el MERCOSUR a la competencia de productos industriales europeos o a productos agrícolas subsidiados. Estas dificultades se acentúan por la crisis que atraviesa la región. Este documento discute los principales obstáculos y beneficios de un acuerdo UE-Mercosur para Uruguay y para sus socios del Mercosur. En el primer capitulo se analizan los flujos comerciales bilaterales, las ventajas comparativas y la protección de ambas regiones con el objetivo de identificar los aspectos más críticos de esta negociación en el plano comercial. El MERCOSUR es un mercado pequeño y poco atractivo para la UE y este acuerdo le exigiría una mayor apertura en un sector particularmente sensible como el agrícola. En contraste, la UE tiene una gran importancia económica y comercial para el MERCOSUR por lo que este tipo de acuerdo cuestiona la estructura de la protección efectiva vigente en el MERCOSUR. Las mayores amenazas estarían en el sector industrial, en particular en manufacturas con mayor valor agregado y contenido tecnológico. Esto no afectaría por igual a los socios del MERCOSUR dado que gran parte de esas industrias se localizarían en Brasil mientras que las mayores promesas en materia de acceso son para Argentina y Uruguay en el sector agrícola. El segundo capítulo se orienta a identificar las prioridades para mejorar las condiciones de acceso de Uruguay al mercado europeo y a evaluar en qué medida se encuentran intereses comunes con los socios del MERCOSUR. Este estudio se realizó en base a una muestra de productos representativa de la oferta exportable de Uruguay y de sus socios. Se detectaron escasas coincidencias entre los cuatro socios del MERCOSUR, gran parte de los intereses comunes se concentran en productos agropecuarios que enfrentan altos niveles de protección en el mercado europeo. El tercer capítulo analiza los posibles efectos de la competencia de la UE en los mercados regionales, en particular, hay dos sectores críticos en los que se concentran las exportaciones europeas al MERCOSUR que son insumos de la industria química y bienes de capital. Hasta el momento gran parte de estas importaciones han accedido a los mercados regionales al amparo de regímenes especiales de importación o como excepciones al Arancel Externo Común. Este trabajo identificó un núcleo reducido de productos en los que se concentran las importaciones del MERCOSUR en los que no parece haber mayores dificultades para mejorar el acceso de las exportaciones de la UE lo que reduciría los riesgos de desvío de comercio al interior del MERCOSUR. Por otra parte, también se identificó un núcleo pequeño de productos cuya liberalización sería potencialmente más conflictiva para el MERCOSUR. En el caso de Uruguay, se identificó un núcleo de productos, mayoritariamente agrícolas, cuyas exportaciones se orientan al MERCOSUR en los que la liberalización del mercado regional puede resultar más conflictiva

Ajuste en los patrones de comercio manufacturero. Uruguay 1988-1994

During 1988 to 1994, sectors producing tradeable goods in Uruguay were faced to many changes in the regional markets as well as in both the trade and exchange polices. The aim of this paper is to analyse the extent up to which the above factors affected the pattern of manufacturing trade. In doing do, many indicators of marginal intra-industy trade were built, which in turn were used to classify the industries in three groups according to the character of the adjustmente of their marginal flows of trade: interindusty exports, interindusty imports and intra-industry adjustment. Further, the analysis shows that there was a deep adjustment in the trade patterns. The macroeconomic conditions favored imports and promoted sectoral adjustement labelled as inter-industy imports. However, some industries experienced inter-industial exporter or intra-industry adjustment. In addition, we conclude that the intra or inter-industry character of the adjustment is strongly associated to the degree of aggregation selected. Thus, when using the four digit industries classification (ISIC), intra-industry trade grew along the period while if the NCCA four digits trade classification is used instead there is no clear tend. Finally, when considering the trade flows between Argentina and Uruguay, it is immediately seen that there was an increase in the intra-industy pattern of trade as well.