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Tariffs and manufacturing location in Argentina

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  • Sanguinetti, Pablo
  • Volpe Martincus, Christian

Abstract

Strong concentration of population and economic activity in a few metropolitan areas is a pervasive feature in several developing countries. Theoretical analyses within the so-called new economic geography have suggested that this phenomenon can be related to trade policies. However, no theoretical consensus has been reached concerning the direction of this effect. Just a few empirical studies have attempted to explore this link. In this paper we exploit the cross-sectoral pattern of tariff protection to explicitly assess to what extent trade policy explains observed geographical concentration of industries in Argentina. This country is an interesting case because economic activities have been traditionally concentrated around the Great Buenos Aires area, while at the same time tariffs have been high on average and have displayed a large cross-sectoral variation over the last decades. The econometric evidence suggests that trade policy has had indeed a significant impact on manufacturing location. In particular, lower sectoral tariffs have been associated with de-concentration of industries out of the area surrounding Buenos Aires.

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  • Sanguinetti, Pablo & Volpe Martincus, Christian, 2009. "Tariffs and manufacturing location in Argentina," Regional Science and Urban Economics, Elsevier, vol. 39(2), pages 155-167, March.
  • Handle: RePEc:eee:regeco:v:39:y:2009:i:2:p:155-167
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    2. Grace Carolina GUEVARA-ROSERO, 2017. "The Effect of Trade on Agglomeration within Regions," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(1), pages 75-97, March.
    3. Cem Karayalcin & Hakan Yilmazkuday, 2015. "Trade and Cities," World Bank Economic Review, World Bank Group, vol. 29(3), pages 523-549.
    4. Maria Florencia Granato, 2011. "REGIONAL NEW ECONOMIC GEOGRAPHY (refereed paper)," ERSA conference papers ersa10p747, European Regional Science Association.
    5. Brülhart, Marius & Carrère, Céline & Trionfetti, Federico, 2012. "How wages and employment adjust to trade liberalization: Quasi-experimental evidence from Austria," Journal of International Economics, Elsevier, vol. 86(1), pages 68-81.
    6. Marius Brülhart, 2011. "The spatial effects of trade openness: a survey," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 147(1), pages 59-83, April.
    7. Kandogan, Yener, 2014. "The effect of foreign trade and investment liberalization on spatial concentration of economic activity," International Business Review, Elsevier, vol. 23(3), pages 648-659.
    8. Xi Yang & Nobuaki Hamaguchi, 2013. "Trade infrastructure and firm location under Cournot competition," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 50(1), pages 153-167, February.
    9. Fernandes, Ana M. & Sharma, Gunjan, 2012. "Together we stand ? agglomeration in Indian manufacturing," Policy Research Working Paper Series 6062, The World Bank.

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