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Trade Liberalisation and Global-scale Forest Transition

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  • Rafael González-Val

    (Universidad de Zaragoza & Institut d'Economia de Barcelona (IEB), Departamento de Análisis Económico)

  • Fernando Pueyo

    (Universidad de Zaragoza, Departamento de Análisis Económico)

Abstract

In this paper, we develop a theoretical model that provides an additional explanation for the forest transition based on a trade liberalisation scenario. Furthermore, in contrast with most explanations, in which the forest transition can only take place at a local level at the expense of other areas, ours is capable of supporting such phenomenon at a worldwide level. We introduce a renewable natural resource (wood), used as an input by manufacturing firms, in a framework with economic geography foundations: transport costs affect the distribution of firms between countries. In a general equilibrium, the results reproduce the forest transition at a global scale: a decrease in transport costs (in particular, that of the natural resource) has a negative effect on the worldwide stock of the natural resource in the short-term; however, this effect is offset during the transition as a consequence of industrial reallocation between countries and eventually disappears in the long-run.

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Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2013.70.

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Date of creation: Jul 2013
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Handle: RePEc:fem:femwpa:2013.70

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Keywords: Forest Transition; Natural Resources; Industrial Location; Trade Liberalisation;

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