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Initiative for Infrastructure Integration in South America: Way toward Regional Convergence

Andrea Bonilla Bolaños (bonilla@gate.cnrs.fr)
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Andrea Bonilla Bolaños: Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon Saint-Etienne, Ecully, F-69130, France; Université Lyon 2, Lyon, F-69007, France

Authors registered in the RePEc Author Service: Andrea Gabriela Bonilla-Bolaños

No 1521, Working Papers from Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon

Abstract: This paper studies how the public provision of transportation infrastructure impact output convergence and trade integration in a two-country dynamic general equilibrium model in which the transportation cost between countries is endogenously determined by the stock of public infrastructure in both countries. Because of its particular conception, the so-called « Initiative for the Integration of Regional Infrastructure in South America (IIRSA) » serves as the case study. Data from Argentina and Brazil is thus used to solve the model. Two main results emerge. First, increasing public investment in infrastructure provides an impetus to commercial integration but does not necessarily generate output convergence. Second, the model shows that the only way for the two countries to achieve output convergence (in a winwin economic growth scenario) is to coordinate their increments on public infrastructure, as proposed by IIRSA.

Keywords: catch up policy; convergence; economic integration; infrastructure integration; IIRSA; South America; steady state (search for similar items in EconPapers)
JEL-codes: C61 F11 F42 O54 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-dge, nep-gro, nep-int and nep-tre
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ftp://ftp.gate.cnrs.fr/RePEc/2015/1521.pdf (application/pdf)

Related works:
Journal Article: Initiative for Infrastructure Integration in South America: Way Toward Regional Convergence (2017) Downloads
Working Paper: Initiative for Infrastructure Integration in South America: Way toward Regional Convergence (2015) Downloads
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