Seminars & Events
APL (Ajiken Power Lunch)
Kiyoyasu Tanaka (IDE-JETRO): Are Free Trade Agreements Pro-poor or Pro-rich? Evidence from Cambodia
Date & time
Thursday, the 2nd of July, 11:00 a.m. to 12:15 p.m.
Venue
Abstract
This paper quantifies the first-order welfare effects of free trade agreements (FTAs) on households in a low-income country. Households earn income from wage labor and farm and non-farm production, and they consume home-produced, domestically produced, and imported goods. FTA-induced tariff reductions between 2004 and 2019 are mapped into household-level welfare changes for Cambodia. Under the assumptions of complete tariff pass-through and uniform wage-tariff elasticities, tariff cuts generate negative income effects across the distribution, with middle-income households experiencing the largest losses and both low- and high-income households facing smaller declines. In contrast, the cost-of-living effects of tariff reduction are positive and rise with income. This pro-rich pattern is driven by gains from imported goods, which increase sharply with income, whereas gains from domestic goods are relatively uniform across households.
Speaker
Moderator
Contact:
Institute of Developing Economies, APL Organizers
E-mail: APLE-mail