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FREE TRADE AND INCOME REDISTRIBUTION IN COLOMBIA

The Free Trade Agreement of the Americas (FTAA) is an effort to unite the economies of South, Central, and North America by 2005. Each member country will have to adjust to free trade and the various sectors of each economy will adjust differently. This paper uses a specific factor model of production to predict the magnitude of output changes and income redistribution in Colombia with the FTAA. Adjustments in outputs and factor prices in the model are large.