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

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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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  • E.A. Haddad & J. Bonet & G.J.D. Hewings & F.S. Perobelli, 2009. "Spatial aspects of trade liberalization in Colombia: A general equilibrium approach," Papers in Regional Science, Wiley Blackwell, vol. 88(4), pages 699-732, November.
  • Handle: RePEc:bla:presci:v:88:y:2009:i:4:p:699-732
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    Cited by:

    1. 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).
    2. Eduardo A. Haddad & Alexandre A. Porsse, Paula C. Pereda, 2012. "Territorial Economic Impacts of Climate Anomalies in Brazil," Working Papers, Department of Economics 2012_20, University of São Paulo (FEA-USP).
    3. repec:elg:eechap:14395_2 is not listed on IDEAS

    More about this item

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies

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