중남미

International trade is crucial to the employment structure in Paraguay.

We study the effect of agricultural trade on structural change. For this purpose, we calibrate a three-sector general equilibrium model to quantify the role of trade in explaining the pattern of structural change in Paraguay.

Paraguay experienced a significant rise in net agricultural exports as a percentage of aggregate output during the period 1962–2012. We find that, first, international trade is crucial to explaining the composition of employment in this country. The model including trade explains 84.7% of the changes in employment shares during this period, while the model without trade can only account for 36.1% of the changes. Second, employment in agriculture remains large in order to satisfy foreign demand, even as the expenditure share of consumption in this sector declines. Third, in the long run, employment shifts directly from agriculture into services, bypassing manufacturing.