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Spatial Aspects of Trade Liberalization in Colombia: A General Equilibrium Approach

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  • Eduardo A. Haddad
  • Jaime Bonet
  • Geoffrey. J.D.Hewings
  • Fernando S Perobelli

Abstract

This paper offers some preliminary steps in the marriage of some of the theoretical foundations of the new economic geography with spatial computable general equilibrium models. Modeling the spatial economy of Colombia using the traditional assumptions of CGE models makes little sense when one territorial unit, Bogotá, accounts for over one fourth 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 CEER Model, a spatial CGE model of the Colombian economy; non-constant returns and non-iceberg transportation costs are introduced and some simulation exercises are 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.

Suggested Citation

  • Eduardo A. Haddad & Jaime Bonet & Geoffrey. J.D.Hewings & Fernando S Perobelli, 2008. "Spatial Aspects of Trade Liberalization in Colombia: A General Equilibrium Approach," Borradores de Economia 515, Banco de la Republica de Colombia.
  • Handle: RePEc:bdr:borrec:515
    DOI: 10.32468/be.515
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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), pages 1-19.
    2. Pedro Elosegui & Marcos Herrera‐Gomez & Jorge Colina, 2022. "Inter‐provincial trade in Argentina: Financial flows and centralism," Regional Science Policy & Practice, Wiley Blackwell, vol. 14(6), pages 270-291, December.
    3. Haddad, Eduardo & Porsse, Alexandre & Pereda, Paula, 2012. "Territorial Economic Impacts of Climate Anomalies in Brazil," TD NEREUS 8-2012, Núcleo de Economia Regional e Urbana da Universidade de São Paulo (NEREUS).
    4. Lucas Hahn de Castro, 2016. "Encadenamientos regionales en Colombia 2004-2012," Revista de Economía del Rosario, Universidad del Rosario, vol. 19(1), pages 29-56, June.
    5. Eduardo Haddad & Inácio F. Araújo, 2020. "The Internal Geography of Services Value-Added in Exports: A Latin American Perspective," Research papers & Policy papers 1925, Policy Center for the New South.
    6. Eduardo Haddad & Weslem Faria & Luis Armando Galvis-Aponte & Lucas Wilfried Hahn-De-Castro, 2016. "Matriz insumo-producto interregional para Colombia, 2012," Documentos de Trabajo Sobre Economía Regional y Urbana 15140, Banco de la República, Economía Regional.
    7. Eduardo A. Haddad & Luis A. Galvis & Inácio F. Araújo-Junior & Vinicius A.Vale, 2018. "Impact Assessment of Scenarios of Interregional Transfers in Colombia," Documentos de Trabajo Sobre Economía Regional y Urbana 16767, Banco de la República, Economía Regional.
    8. Eduardo A. Haddad & Inácio F. Araújo, 2021. "The internal geography of services value‐added in exports: A Latin American perspective," Papers in Regional Science, Wiley Blackwell, vol. 100(3), pages 713-744, June.
    9. Eduardo A. Haddad & Jesús P. Mena-Chalco, Otavio J. G. Sidone, 2015. "Scholarly Collaboration in Regional Science in Developing Countries: The Case of the Brazilian REAL Network," Working Papers, Department of Economics 2015_12, University of São Paulo (FEA-USP).
    10. Eduardo A. Haddad & Jesús P. Mena-Chalco & Otávio J. G. Sidone, 2017. "Scholarly Collaboration in Regional Science in Developing Countries," International Regional Science Review, , vol. 40(5), pages 500-529, September.
    11. repec:elg:eechap:14395_2 is not listed on IDEAS

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    More about this item

    Keywords

    Economic geography; CGE model; Colombia; Efficiency gains Classification-JEL: D58; R12; R13.;
    All these keywords.

    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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