Trade Liberalization in Latin America and Eastern Europe: the Cases of Ecuador and Slovenia

Abstract

We analyze the potential effects of ongoing trade reforms: Ecuador signing an FTA with the US, and Slovenia joining the EU. We construct a static Applied General Equilibrium Model and perform numerical experiments eliminating all import tariffs. Based on Input-Output tables, we construct Social Accounting Matrices for each country for calibration. Additional experiments are performed: sensitivity analyses on the trade elasticities, partial liberalizations, fiscal impacts of eliminating tariff revenues, and an alternative Slovenian liberalization framework. We find that both countries benefit from these reforms, with import prices falling and exports rising. However, different arrangements of trade liberalization have different implications on trade and welfare patterns.• JEL Classification: F14, F15