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Persistent Uneven Spread of Economic Activities within Developing RIAs

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Author Info
Souleymane COULIBALY

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Abstract

One 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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Publisher Info
Paper provided by Université de Lausanne, Faculté des HEC, DEEP in its series Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) with number 06.01.

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Length: 33 pages
Date of creation: Jan 2006
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Handle: RePEc:lau:crdeep:06.01

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Related research
Keywords: uneven development; regional integration area; convergence;

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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, and Regional Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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References listed on IDEAS
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