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Regional Integration and the Persistent Uneven Spread of Economic Activities in Developing Areas

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  • Souleymane Coulibaly

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.

Suggested Citation

  • Souleymane Coulibaly, 2006. "Regional Integration and the Persistent Uneven Spread of Economic Activities in Developing Areas," Economie Internationale, CEPII research center, issue 106, pages 5-23.
  • Handle: RePEc:cii:cepiei:2006-2ta
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    File URL: http://www.cepii.fr/IE/rev106/rev106a.htm
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    More about this item

    Keywords

    Uneven development; regional integration area; transport infrastructure; convergence; developing countries; models;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • 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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