International Borders, Integration and Economic Development: Evidence from Argentina

Nazarena Delicia Maffini () and Fernando Gonzalez
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Nazarena Delicia Maffini: Universidad Nacional de Misiones, Posadas, Argentina, Postal: Universidad Nacional de Misiones Posadas, Argentina

Journal of Economic Integration, 2023, vol. 38, issue 4, 545-570

Abstract: This paper analyzes the effects of international borders and of trade agreements on subnational development in Argentina. The identification strategy leverages the Mercosur trade services agreement in 2005, and the different proximity of the districts to the international border with member countries. Two main outcomes are analyzed: economic growth and inequality. For this purpose, an annual panel of districts covering more than two decades (1992-2013) is used. The results show that the presence of an international border has a negative and significant effect on the economic growth of border districts (-0.14 percentage points of GDP annually) but also contributes to reducing inequality compared to districts without a border. On the other hand, a commercial integration agreement tends to partially offset the negative effects on economic growth (+0.04 percentage points of GDP annually). The results of the paper are relevant in terms of trade and development policy recommendations: deepening integration agreements constitutes a potential mechanism to boost growth in the poorest regions and thus reduce subnational disparities.

Keywords: international border; trade agreement; Mercosur; economic development; growth; inequality (search for similar items in EconPapers)
JEL-codes: D31 F14 F15 F43 I30 R12 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:ris:integr:0886

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