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

Author

Listed:
  • Aline Souza Magalhães

    (Cedeplar-UFMG)

  • Edson Domingues

    (Cedeplar-UFMG)

Abstract

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.

Suggested Citation

  • Aline Souza Magalhães & Edson Domingues, 2009. "Regional inequality and growth: the role of interregional trade in the Brazilian economy," Textos para Discussão Cedeplar-UFMG td359, Cedeplar, Universidade Federal de Minas Gerais.
  • Handle: RePEc:cdp:texdis:td359
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    File URL: http://www.cedeplar.ufmg.br/pesquisas/td/TD%20359.pdf
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    References listed on IDEAS

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    1. 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.
    2. 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.
    3. Ferreira Filho, Joaquim Bento de Souza & Horridge, Mark Jonathan, 2006. "Economic Integration, Poverty and Regional Inequality in Brazil," Revista Brasileira de Economia - RBE, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil), vol. 60(4), February.
    4. 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.
    5. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685.
    6. 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.
    7. 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].
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    CGE modeling; regional trade; inequality;

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • 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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