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

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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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    More about this item

    Keywords

    CGE modeling; regional trade; inequality;
    All these keywords.

    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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