Poverty Impacts of Preferential and Multilateral Trade Liberalization on the Philippines: A Computable General Equilibrium Analysis

PEP MPIA Working Paper 2010-06

40 Pages Posted: 14 Sep 2010 Last revised: 11 Jul 2018

See all articles by Erwin L. Corong

Erwin L. Corong

Monash University - Centre of Policy Studies

Rachel C. Reyes

De La Salle University

Angelo B. Taningco

De La Salle University

Date Written: March 1, 2010

Abstract

The Philippines has been participating in preferential and multilateral trade liberalization since the 1990s. However, the poverty effects of these trading arrangements are not yet fully known. This paper, which uses a computable general equilibrium (CGE) model, finds that reducing both Most-Favored-Nation (MFN) tariff rate and ASEAN Free Trade Area’s Common Effective Preferential Tariff (CEPT) rate, combined with enhancing direct income taxes to offset the loss in tariff revenue, are instrumental in reducing poverty in the country. It also shows that the relatively poor and less-skilled household groups, like agricultural workers and industrial workers, as well as the poorest of the poor, gain from such trading arrangements because these substantially lower consumer prices. As such, this paper proposes that the Philippine government be more active and further promote preferential and multilateral trade liberalization in order to help eradicate poverty.

Keywords: Computable general equilibriu, international trade, social

JEL Classification: D33, D58, F13, F14, I32

Suggested Citation

Corong, Erwin L. and Reyes, Rachel C. and Taningco, Angelo B., Poverty Impacts of Preferential and Multilateral Trade Liberalization on the Philippines: A Computable General Equilibrium Analysis (March 1, 2010). PEP MPIA Working Paper 2010-06, Available at SSRN: https://ssrn.com/abstract=1676388 or http://dx.doi.org/10.2139/ssrn.1676388

Erwin L. Corong (Contact Author)

Monash University - Centre of Policy Studies ( email )

23 Innovation Walk
Wellington Road
Clayton, Victoria 3800
Australia

Rachel C. Reyes

De La Salle University ( email )

2401 Taft Avenue
Manila, Metro Manila 1004
Philippines

Angelo B. Taningco

De La Salle University ( email )

2401 Taft Avenue
Manila, Metro Manila 1004
Philippines

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