Regional Integration and the Persistent Uneven Spread of Economic Activities in Developing Areas
AbstractOne of the striking features of many developing Regional Integration Areas (RIAs) is the strong asymmetry between countries. In this paper, we consider a three-country two-sector model in a footloose capital framework. Two of these countries are involved in a regional integration process while the third is left out of the union. They are “port-like” economies where only one region is endowed with international infrastructures, so that imports and exports between trading partners necessarily pass through this transit region. The comparative statics of our model show that better domestic transport infrastructure helps to attract a higher share of footloose activity when trade costs within the RIA are lowered, inducing a persistent uneven spread of the mobile sector between the member countries. If the domestic infrastructure levels of these countries are both raised towards a high-quality level, a convergence process is triggered to the disadvantage of the country left outside the RIA.
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Bibliographic InfoArticle provided by CEPII research center in its journal Economie Internationale.
Volume (Year): (2006)
Issue (Month): 106 ()
Uneven development; regional integration area; transport infrastructure; convergence; developing countries; models;
Find related papers by JEL classification:
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
- F15 - International Economics - - Trade - - - Economic Integration
- R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
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