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Spatial aspects of trade liberalization in Colombia: A general equilibrium approach

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  • E.A. Haddad
  • J. Bonet
  • G.J.D. Hewings
  • F.S. Perobelli

Abstract

This paper offers some preliminary steps in the marriage of some of the theoretical foundations of new economic geography with spatial computable general equilibrium models. Modelling the spatial economy of Colombia using the traditional assumptions of computable general equilibrium (CGE) models makes little sense when one territorial unit, Bogotá, accounts for over one quarter of GDP and where transportation costs are high and accessibility low compared to European or North American standards. Hence, handling market imperfections becomes imperative as does the need to address internal spatial issues from the perspective of Colombia's increasing involvement with external markets. The paper builds on the Centro de Estudios de Economia Regional (CEER) model, a spatial CGE model of the Colombian economy; non-constant returns and non-iceberg transportation costs are introduced and some simulation exercises carried out. The results confirm the asymmetric impacts that trade liberalization has on a spatial economy in which one region, Bogotá, is able to more fully exploit scale economies "vis-à-vis" the rest of Colombia. The analysis also reveals the importance of different hypotheses on factor mobility and the role of price effects to better understand the consequences of trade opening in a developing economy. Copyright (c) 2009 the author(s). Journal compilation (c) 2009 RSAI.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Papers in Regional Science.

Volume (Year): 88 (2009)
Issue (Month): 4 (November)
Pages: 699-732

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Handle: RePEc:bla:presci:v:88:y:2009:i:4:p:699-732

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=1056-8190

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References

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  1. Haddad, Eduardo A. & Hewings, Geoffrey J.D., 2005. "Market imperfections in a spatial economy: some experimental results," The Quarterly Review of Economics and Finance, Elsevier, vol. 45(2-3), pages 476-496, May.
  2. Diego Puga, 1996. "Urbanisation patterns: European vs less developed countries," LSE Research Online Documents on Economics 20656, London School of Economics and Political Science, LSE Library.
  3. Sánchez Fabio y Hernández Gustavo Adolfo, 2004. "Colombia: aumento de las exportaciones y sus efectos sobre el crecimiento, empleo y pobreza," REVISTA DESARROLLO Y SOCIEDAD, UNIVERSIDAD DE LOS ANDES-CEDE.
  4. Attanasio, Orazio & Goldberg, Pinelopi & Pavcnik, Nina, 2003. "Trade Reforms and Wage Inequality in Colombia," CEPR Discussion Papers 4023, C.E.P.R. Discussion Papers.
  5. Gordon H. Hanson, 1994. "Regional Adjustment to Trade Liberalization," NBER Working Papers 4713, National Bureau of Economic Research, Inc.
  6. Maria Teresa Ramirezgiraldo & Ana Maria Ireguibohorquez & Maria Del Pilar Esguerra U, 2004. "Trade Between Colombiaand East Asia: An Analysis Using A Cgemodel," ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE.
  7. Dirección de Estudios Económicos & Dirección de Desarrollo Empresarial, 2003. "Efectos de un acuerdo bilateral de libre comercio con Estados Unidos," ARCHIVOS DE ECONOMÍA 002426, DEPARTAMENTO NACIONAL DE PLANEACIÓN.
  8. Ades, Alberto F & Glaeser, Edward L, 1995. "Trade and Circuses: Explaining Urban Giants," The Quarterly Journal of Economics, MIT Press, vol. 110(1), pages 195-227, February.
  9. Olga Alonso-Villar, 2000. "Large metropolises in the Third World: an explanation," Working Papers 0004, Universidade de Vigo, Departamento de Economía Aplicada.
  10. Iregui, Ana Maria, 2005. "Decentralised provision of quasi-private goods: The case of Colombia," Economic Modelling, Elsevier, vol. 22(4), pages 683-706, July.
  11. Johannes Bröcker & Martin Schneider, 2002. "How Does Economic Development in Eastern Europe Affect Austria's Regions? A Multiregional General Equilibrium Framework," Journal of Regional Science, Wiley Blackwell, vol. 42(2), pages 257-285.
  12. Miles Kenneth LIGHT & Thomas Fox RUTHERFORD, 2003. "Free Trade Area of the Americas. An impact Assessment for Colombia," ARCHIVOS DE ECONOMÍA 002744, DEPARTAMENTO NACIONAL DE PLANEACIÓN.
  13. Pinelopi K. Goldberg & Nina Pavcnik, 2004. "Trade, Inequality, and Poverty: What Do We Know? Evidence from Recent Trade Liberalization Episodes in Developing Countries," NBER Working Papers 10593, National Bureau of Economic Research, Inc.
  14. Jaime Bonet & Adolfo Meisel Roca, 2006. "El legado colonial como determinante del ingreso per cápita departamental en Colombia," DOCUMENTOS DE TRABAJO SOBRE ECONOMÍA REGIONAL 002520, BANCO DE LA REPÚBLICA - ECONOMÍA REGIONAL.
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Citations

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Cited by:
  1. Alexandre Porsse & Eduardo Haddad & Paula Pereda, 2013. "Territorial Economic Impacts of Climate Anomalies in Brazil," ERSA conference papers ersa13p705, European Regional Science Association.
  2. Arguello, Ricardo, 2009. "The Regional Impact of Discriminatory Trade Liberalization on Colombian Agriculture," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 39(2).

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