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Trade Liberalization and Regional Inequality - Do Transportation Costs Impose a Spatial Poverty Trap?

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Eduardo Haddad ()
Fernando Perobelli ()

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Abstract

This paper focuses on the spatial impacts of barriers to trade, in the form of tariffs, in a national economy. More specifically, we are concerned with the spatial impediments for the internal transmission of the potential benefits of trade liberalization, in the form of high transportation costs that the more remote regions face. The strategy adopted in this research utilizes a spatial CGE model integrated to a geo-coded transportation model to evaluate shifts in the economic center of gravity and regional specialization in the Brazilian economy due to further liberal tariff policies. Comparative advantage is grasped through the use of differential regional production technologies; geographical advantage is verified through the explicit modeling of the transportation services, as well as increasing returns associated to agglomeration economies; and cumulative causation appears through the operation of internal and external multipliers and interregional spillover effects.

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Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa05p700.

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Date of creation: Aug 2005
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Handle: RePEc:wiw:wiwrsa:ersa05p700

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  1. Harrison, Glenn W. & Rutherford, Thomas F. & Tarr,David & Gurgel, Angelo, 2003. "Regional, multilateral, and unilateral trade policies on MERCOSUR for growth and poverty reduction in Brazil," Policy Research Working Paper Series 3051, The World Bank. [Downloadable!]
  2. Mark Horridge, 2000. "ORANI-G: A General Equilibrium Model of the Australian Economy," Centre of Policy Studies/IMPACT Centre Working Papers op-93, Monash University, Centre of Policy Studies/IMPACT Centre. [Downloadable!]
  3. Domingues, Edson P. & Haddad, Eduardo A. & Hewings, Geoffrey, 2008. "Sensitivity analysis in applied general equilibrium models: An empirical assessment for MERCOSUR free trade areas agreements," The Quarterly Review of Economics and Finance, Elsevier, vol. 48(2), pages 287-306, May. [Downloadable!] (restricted)
  4. Jacek Cukrowski & Manfred M. Fischer, 2000. "Theory of Comparative Advantage: Do Transportation Costs Matter?," Journal of Regional Science, Blackwell Publishing, vol. 40(2), pages 311-322. [Downloadable!] (restricted)
  5. Kashif S. Mansori, 2003. "The Geographic Effects of Trade Liberalization with Increasing Returns in Transportation," Journal of Regional Science, Blackwell Publishing, vol. 43(2), pages 249-268. [Downloadable!] (restricted)
  6. Baer, Werner & Maloney, William, 1997. "Neoliberalism and income distribution in Latin America," World Development, Elsevier, vol. 25(3), pages 311-327, March. [Downloadable!] (restricted)
  7. Dixon, Peter B. & Parmenter, B.R., 1996. "Computable general equilibrium modelling for policy analysis and forecasting," Handbook of Computational Economics, in: H. M. Amman & D. A. Kendrick & J. Rust (ed.), Handbook of Computational Economics, edition 1, volume 1, chapter 1, pages 3-85 Elsevier. [Downloadable!] (restricted)
  8. Leonardo Campos Filho, 1998. "Unilateral Liberalisation and Mercosul: Implications for Resource Allocation," Revista Brasileira de Economia, Graduate School of Economics, Getulio Vargas Foundation (Brazil), vol. 52(4), April.
  9. Matthew W. Peter & Mark Horridge & G.A.Meagher & Fazana Naqvi & B.R.Parmenter, 1996. "The Theoretical Structure of MONASH-MRF," Centre of Policy Studies/IMPACT Centre Working Papers op-85, Monash University, Centre of Policy Studies/IMPACT Centre. [Downloadable!]
  10. Hans M. Amman & David A. Kendrick, . "Computational Economics," Online economics textbooks, SUNY-Oswego, Department of Economics, number comp1, March. [Downloadable!]
  11. Venables, Anthony J, 1998. "The Assessment: Trade and Location," Oxford Review of Economic Policy, Oxford University Press, vol. 14(2), pages 1-6, Summer.
  12. Haddad, Eduardo A. & Domingues, Edson P. & Perobelli, Fernando S., 2002. "Regional effects of economic integration: the case of Brazil," Journal of Policy Modeling, Elsevier, vol. 24(5), pages 453-482, August. [Downloadable!] (restricted)
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