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Regional inequality and growth: the role of interregional trade in the Brazilian economy

  • Aline Souza Magalhães

    (Cedeplar-UFMG)

  • Edson Domingues

    (Cedeplar-UFMG)

This paper deals with interregional trade in the Brazilian Economy, estimating its role on efficiency, international competitiveness and regional inequality. Our modeling encompasses much detail. Firstly, we use a large-scale multi-regional computable general equilibrium (CGE) model of Brazil. The model is bottom-up for Brazil's 27 states. Despite the high level of regional disaggregation, the level of sectoral disaggregation is also high, at 36 sectors. Applying the CGE model in simulation exercises, we explore the impacts of reducing transport costs among Brazilian states, identifying the most relevant links for different economic goals (national growth, production costs and regional inequality). The procedure is similar to the “field of influence” approach in the input-output literature (Hewings et al, 2005). We find that trade among most developed states have impact on national growth and international competitiveness, but can also increase regional inequality.

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Paper provided by Cedeplar, Universidade Federal de Minas Gerais in its series Textos para Discussão Cedeplar-UFMG with number td359.

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Length: 33 pages
Date of creation: Sep 2009
Date of revision:
Handle: RePEc:cdp:texdis:td359
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  1. Horridge, Mark & Madden, John & Wittwer, Glyn, 2005. "The impact of the 2002-2003 drought on Australia," Journal of Policy Modeling, Elsevier, vol. 27(3), pages 285-308, April.
  2. Eduardo Haddad & Geoffrey Hewings, 2007. "Analytically Important Transportation Links: A Field Of Influence Approach To Cge Models," Anais do XXXV Encontro Nacional de Economia [Proceedings of the 35th Brazilian Economics Meeting] 085, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
  3. Joaquim Bento de Souza Ferreira Filho & Mark Horridge, 2006. "The Doha Development Agenda and Brazil: Distributional Impacts ," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 28(3), pages 362-369.
  4. Edson Paulo Domingues & Francisca Diana Ferreira Viana & Heder Carlos de Oliveira, 2007. "Investimentos em infra-estrutura no Nordeste: projeções de impacto e perspectivas de desenvolvimento," Textos para Discussão Cedeplar-UFMG td319, Cedeplar, Universidade Federal de Minas Gerais.
  5. 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.
  6. Joaquim Bento Ferreira-Filho & Mark Horridge, 2004. "Economic Integration, Poverty and Regional Inequality in Brazil," Centre of Policy Studies/IMPACT Centre Working Papers g-149, Victoria University, Centre of Policy Studies/IMPACT Centre.
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