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

  • Eduardo A. Haddad

    ()

  • Jaime Bonet

    ()

  • Geoffrey. J.D.Hewings

    ()

  • Fernando S Perobelli

    ()

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.

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Paper provided by Banco de la Republica de Colombia in its series Borradores de Economia with number 515.

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  1. Ana María Iregui, . "Decentralised Provision of Quasi- Private Goods: The Case of Colombia," Borradores de Economia 203, Banco de la Republica de Colombia.
  2. Alberto F. Ades & Edward L. Glaeser, 1994. "Trade and Circuses: Explaining Urban Giants," NBER Working Papers 4715, National Bureau of Economic Research, Inc.
  3. Gordon H. Hanson, 1994. "Regional Adjustment to Trade Liberalization," NBER Working Papers 4713, National Bureau of Economic Research, Inc.
  4. Olga Alonso-Villar, 2000. "Large metropolises in the Third World: an explanation," Working Papers 0004, Universidade de Vigo, Departamento de Economía Aplicada.
  5. Miles Kenneth LIGHT & Thomas Fox RUTHERFORD, 2003. "Free Trade Area of the Americas. An impact Assessment for Colombia," ARCHIVOS DE ECONOMÍA 002744, DEPARTAMENTO NACIONAL DE PLANEACIÓN.
  6. Maria Teresa Ramirezgiraldo & Ana Maria Ireguibohorquez & Maria Del Pilar Esguerra U, 2004. "Trade Between Colombiaand East Asia: An Analysis Using A Cgemodel," ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE.
  7. Attanasio, Orazio & Goldberg, Pinelopi & Pavcnik, Nina, 2003. "Trade Reforms and Wage Inequality in Colombia," CEPR Discussion Papers 4023, C.E.P.R. Discussion Papers.
  8. Dirección de Estudios Económicos & Dirección de Desarrollo Empresarial, 2003. "Efectos de un acuerdo bilateral de libre comercio con Estados Unidos," ARCHIVOS DE ECONOMÍA 002426, DEPARTAMENTO NACIONAL DE PLANEACIÓN.
  9. Johannes Bröcker & Martin Schneider, 2002. "How Does Economic Development in Eastern Europe Affect Austria's Regions? A Multiregional General Equilibrium Framework," Journal of Regional Science, Wiley Blackwell, vol. 42(2), pages 257-285.
  10. Diego Puga, 1996. "Urbanisation Patterns: European vs Less Developed Countries," CEP Discussion Papers dp0305, Centre for Economic Performance, LSE.
  11. Sánchez Fabio y Hernández Gustavo Adolfo, 2004. "Colombia: aumento de las exportaciones y sus efectos sobre el crecimiento, empleo y pobreza," REVISTA DESARROLLO Y SOCIEDAD, UNIVERSIDAD DE LOS ANDES-CEDE.
  12. Haddad, Eduardo A. & Hewings, Geoffrey J.D., 2005. "Market imperfections in a spatial economy: some experimental results," The Quarterly Review of Economics and Finance, Elsevier, vol. 45(2-3), pages 476-496, May.
  13. Pinelopi K. Goldberg & Nina Pavcnik, 2004. "Trade, Inequality, and Poverty: What Do We Know? Evidence from Recent Trade Liberalization Episodes in Developing Countries," NBER Working Papers 10593, National Bureau of Economic Research, Inc.
  14. Jaime Bonet & Adolfo Meisel Roca, 2006. "El legado colonial como determinante del ingreso per cápita departamental en Colombia," DOCUMENTOS DE TRABAJO SOBRE ECONOMÍA REGIONAL 002520, BANCO DE LA REPÚBLICA - ECONOMÍA REGIONAL.
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