Computable general equilibrium (CGE) analysis has become a well-established methodology for the estimation of trade and welfare effects resulting from trade liberalization.
This paper reports on the possibility of extending the use of CGE analysis to explore important issues related to the link between trade and development, in particular the impact of trade liberalisation on income distribution, and the ways in which both the welfare and distribution effects of trade liberalization may be modified by various development-related policies.
These possibilities are illustrated by reference to research on agricultural trade liberalization in the Asia Pacific Economic Cooperation (APEC) region, but it is suggested that the approach used may have more general application. While the policy issues raised in relation to APEC are interesting they are not the main focus of this paper, having been covered more extensively elsewhere, for example in Gilbert, Scollay and Wahl (2000).
A considerable amount of explanatory material about the APEC issues is provided for illustrative purposes, but this is primarily aimed at highlighting the potential analytical contribution of the methodological approach, which is the main focus of this paper.