Preferential liberalization and its economy effects in Honduras
This paper quantifies the likely benefits of trade and investment liberalization in a small, poor, open economy, using the accession of Honduras to the Dominican Republic-Central American Free Trade Agreement as a case study.
Thursday, January 31, 2008
The results show that bilateral trade liberalization with the United States is likely to have almost no effect on welfare in Honduras, while the reciprocal removal of protection vis-a-vis the rest of Central America would lead to significantly larger gains. Potential gains from increased net foreign direct investment inflows overwhelm those expected from trade reform alone, particularly if the new foreign direct investment generates productivity spillovers. However, if it is to replace Honduran investment rather than complement domestic capital formation, growth performance is unlikely to improve and may even suffer. The paper's results identify several areas for policy attention by Honduran policy makers to make the Dominican Republic-Central American Free Trade Agreement more development-friendly. These include carefully considering the budgetary implications of trade reform, widening social safety nets to counter the trends toward increasing income inequality, and sequencing the reforms to ensure a close alignment of Honduras'comparative advantage on the regional and global markets.
Bringing together leaders of the public and private sector to address critical issues challenging competitiveness in Central America.
After months in a difficult process, the Superintendence of Telecommunications has finally be formed.
Representatives from the US, CA and the Dominican Republic met in Santo Domingo to analyze the need for technical assitance for the signed in CAFTA-DR 2004.
Trade in some of the countries involved has grown by 20 percent since the introduction two years ago of the Cafta accord between the United States and Central America and the Dominican Republic, according to US Department of Trade figures.
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