Landlocked Countries: A Way to Integrate with Coastal Economies
We consider some of the important economic constraints faced by landlocked economies in a game theoretic framework that involves its neighbor that has access to the ocean. We identify the strengths that the landlocked economy might have or develop through policy in order to negotiate with its neighbor. The model is an infinitely repeated game between two asymmetric economies, with the threat of reversion to Nash equilibrium if an economy deviates from the cooperative agreement. We find that sustainable cooperative equilibriums that are Pareto superior do exist, drawing attention to the benefits of economic cooperation between neighbors even if they differ on geographical, political, or diplomatic issues. We do several robustness checks that further bring out the constraints and policy implications for the landlocked economies.
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- Michael Faye & John McArthur & Jeffrey Sachs & Thomas Snow, 2004. "The Challenges Facing Landlocked Developing Countries," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 5(1), pages 31-68.
- MacKellar, Landis & Woergoetter, Andreas & Woerz, Julia, 2000. "Economic Development Problems of Landlocked Countries," Transition Economics Series 14, Institute for Advanced Studies.
- Christopher GRIGORIOU & Céline CARRERE, 2008.
"Landlockedness, Infrastructure and Trade:New Estimates for Central Asian Countries,"
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- Hemanta Shrestha & Dennis Heffley, 2003. "Regional Integration and Industrial Location in a Landlocked Spatial Economy," Working papers 2003-07, University of Connecticut, Department of Economics.
- Borchert, Ingo & Gootiiz, Batshur & Grover, Arti & Mattoo, Aaditya, 2012. "Landlocked or policy locked ? how services trade protection deepens economic isolation," Policy Research Working Paper Series 5942, The World Bank.
- K. Shrestha, Hemanta & P. Upadhyay, Mukti, 2004. "Political Economy of Regional Trading Arrangements in South Asia," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 19, pages 427-446.
- De, Prabir, 2006. "Trade, Infrastructure and Transaction Costs: The Imperatives for Asian Economic Cooperation," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 21, pages 708-735.
- Grigoriou, Christopher, 2007. "Landlockedness, infrastructure and trade : new estimates for central Asian countries," Policy Research Working Paper Series 4335, The World Bank.
- Christopher GRIGORIOU & Céline CARRERE, 2008. "Landlockedness, Infrastructure and Trade:New Estimates for Central Asian Countries," Working Papers 200801, CERDI.
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