Date of Graduation

5-2009

Document Type

Dissertation

Degree Name

Doctor of Philosophy in Public Policy (PhD)

Degree Level

Graduate

Department

Political Science

Advisor

Eric J. Wailes

Committee Member

Jennie S. Popp

Second Committee Member

Daniel V. Rainey

Third Committee Member

Jeffrey J. Ryan

Keywords

Adjustment programs, Agricultural policy, Dominican Republic-Central American Free Trade Agreement, Economic modeling, Honduras, Public Policy

Abstract

Honduras has for almost two decades embraced economic integration as a way to achieve sustained economic growth. The DR-CAFTA agreement signed in 2004 represents another step towards economic openness. The agreement generated a heated debate about the benefits and costs to the Honduran economy. Previous assessments suggest that Honduras will have a marginal aggregate benefit from DR-CAFTA. The findings from this study suggest that the agreement might actually yield a marginal loss vis-à-vis the counterfactual. Previous studies also stress the potential for large losses resulting from the agreement, particularly for some traditional and sensitive agricultural sectors. The findings from this study suggest that, in aggregate, the welfare of basic grain households will decrease only marginally as a result of DR-CAFTA. This study contributes to the existing literature by providing a new assessment of the agreement on the Honduran economy, employing a new Social accounting matrix and a dynamic computable general equilibrium model particularly developed for this study. Furthermore, this study expands the previous literature, assessing the feasibility of alternative interventions, and developing a policy proposal that could serve as a road map for future public intervention aimed at easing the transition to more competitive domestic agricultural markets. The proposed intervention consists of three components, namely, (1) a technical assistance program, (2) a short-term agricultural financing program, and (3) a medium-term agricultural financing program.

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