TRADE LIBERALIZATION AND REGIONAL INEQUALITY: DO TRANSPORTATION COSTS IMPOSE A SPATIAL POVERTY TRAP?

Eduardo Haddad () and Fernando Salgueiro Perobelli ()

Anais do XXXII Encontro Nacional de Economia [Proceedings of the 32th Brazilian Economics Meeting] from ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics]

Abstract: In this paper, we focus on the regional (intra-national) impacts of barriers to trade, in the form of tariffs, in a national economy. More specifically, we are concerned with the spatial impediments for the internal transmission of the potential benefits of trade liberalization, in the form of high transportation costs that the more remote regions face. A cost-competitiveness approach, base don relative changes in the sectoral and regional cost and demand structures, is adopted to isolate the likely spatial effects of further tariff reductions in Brazil. It tackles the three basis for the analytical framework proposed in the literature: comparative advantage is grasped through the use of differential regional production technologies; geographical advantage is verified through the explicit modeling of the transportation services and the costs of moving products based on origin-destination pairs, as well as increasing returns associated to agglomeration economies; and cumulative causation appears through the operation of internal and external multipliers and interregional spillover effects in comparative-static experiments, such as those proposed here.

JEL-codes: R13 F17 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-geo and nep-lam
Date: Written
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Related works:
Working Paper: Trade Liberalization and Regional Inequality - Do Transportation Costs Impose a Spatial Poverty Trap? (2005)
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