128 lines
4.4 KiB
YAML
128 lines
4.4 KiB
YAML
abstract: 'Uruguay began liberalizing its economy in the 1970s. The process
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continued through the 1990s when the country joined Mercosur. The
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reforms were mainly oriented at liberalizing trade and financial flows,
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much less was done in terms of privatization and public sector reform.
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Uruguay established itself as a regional financial and offshore banking
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centre. In the early 1990s, inflation was stabilized on the basis of
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high capital inflows and a stabilization policy that used the exchange
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rate as a nominal anchor. The ensuing real exchange rate appreciation
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harmed export growth with the rest of the world and, along with the
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surge in capital inflows, pushed up import demand. Real appreciation of
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the exchange rate against Uruguay''s trading partners in Mercosur was
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virtually nil and exports benefited from the new set of trade
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preferences within the group. This made macroeconomic performance in
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Uruguay strongly dependent on the business cycle in Argentina and
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Brazil. When these two countries shifted away from a fix on the nominal
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exchange rate, starting with the floating of the Brazilian real,
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Uruguay''s exports were severely hit pushing the economy into recession.
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The recession was deepened with Argentina''s crisis at the turn of the
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century. Uruguay''s economic recovery from the sharp decline in the first
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half of the 1980s thus lasted until 1998. Employment increased, despite
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job losses in agriculture and manufacturing following productivity
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growth associated with the opening process. Employment growth was
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particularly strong in services. Job shedding in manufacturing was also
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associated with a fall-out of many firms in import-competing sectors.
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Real labour incomes also increased during this period of growth. Skilled
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workers were the main beneficiaries as structural adjustment made
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production more skill intensive. Labour income inequality increased, but
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overall employment and real wage increases allowed for a visible
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reduction in poverty. These trends reversed after 1998. Simulations with
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the computable general equilibrium for Uruguay confirm the positive
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effects of trade liberalization in the context of an appreciated
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exchange rate on growth and poverty reduction. The simulations also
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suggest that further negotiated trade liberalization in the context of
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the Free Trade Area of the Americas or the World Trade Organization
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(WTO) would reinforce these effects. With further unilateral trade
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liberalization export growth would require maintaining the exchange rate
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competitive, while employment growth would be served with allowing for
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some appreciation of the currency. In the case of negotiated,
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multilateral trade liberalization the nature of the exchange rate regime
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does not appear to matter for Uruguay in order to reap the gains from
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trade. World market prices would move in favour of Uruguay''s exports,
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particularly under a WTO scenario that would benefit its agricultural
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exports. Unskilled workers would be the principal beneficiaries of such
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a scenario and poverty and inequality would be reduced. It seems to
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confirm Uruguay''s paradoxical relationship with trade integration.
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Mercosur brought both trade benefits and greater vulnerability to the
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volatility of the economies of its large neighbours, Argentina and
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Brazil, while WTO equally would bring trade gains but enhance the
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country''s vulnerability to the volatility in primary commodity markets.'
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affiliation: 'Laens, S (Corresponding Author), CINVE, Montevideo, Uruguay.
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Laens, Silvia; Perera, Marcelo, CINVE, Montevideo, Uruguay.'
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author: Laens, Silvia and Perera, Marcelo
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author_list:
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- family: Laens
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given: Silvia
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- family: Perera
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given: Marcelo
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booktitle: 'WHO GAINS FROM FREE TRADE: EXPORT-LED GROWTH, INEQUALITY AND POVERTY IN
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LATIN AMERICA'
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da: '2023-09-28'
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editor: Vos, R and Ganuza, E and Morley, S and Robinson, S
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files: []
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isbn: 978-0-203-96583-2
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language: English
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number-of-cited-references: '21'
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pages: 361-392
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papis_id: 9b450d588204d90f1a09e2950b34ad5b
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ref: Laens2006uruguayexport
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series: Routledge Studies in Development Economics
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times-cited: '0'
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title: Uruguay - export growth, poverty and income distribution
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type: article
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unique-id: WOS:000278891300013
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usage-count-last-180-days: '2'
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usage-count-since-2013: '4'
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volume: '50'
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web-of-science-categories: Economics
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year: '2006'
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