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Policy making in asymmetric regional integrations: a methodology for allocating cohesion fund resources

  • Calfat, Germán
  • Flôres, R.G.
  • Rivas, Ana
  • Granato, M.

We propose a combination of region- and product-identification procedures in order to map the potential of economic activities in areas with poor infrastructure in an asymmetric regional integration. After identifying spatial units with relative backwardness in terms of infrastructure, we detect the most competitive exports, estimate gravity models for each of them and perform simulations for an improvement of 20% in the value of the infrastructure index. In a final step, we identify goods/provinces where investment in infrastructure should be directed to. A thorough and data intensive application is made to the case of the Fondo de Convergencia Estructural del MERCOSUR (FOCEM), the recently created cohesion fund of one of the most asymmetric integration projects. Our main conclusion is that FOCEM resources, under the global objective of enhancing structural convergence among the members, should be totally directed to Paraguay instead of being dispersed among all backward regions in the bloc.

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Paper provided by Universiteit Antwerpen, Institute of Development Policy and Management (IOB) in its series IOB Working Papers with number 2010.05.

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Length: 41 pages
Date of creation: Mar 2010
Date of revision:
Handle: RePEc:iob:wpaper:2010005
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  1. Fr�d�ric Robert-Nicoud, 2006. "Agglomeration and Trade with Input–Output Linkages and Capital Mobility," Spatial Economic Analysis, Taylor & Francis Journals, vol. 1(1), pages 101-126.
  2. Lars-Hendrik Roller & Leonard Waverman, 2001. "Telecommunications Infrastructure and Economic Development: A Simultaneous Approach," American Economic Review, American Economic Association, vol. 91(4), pages 909-923, September.
  3. Puga, Diego, 2001. "European Regional Policies in Light of Recent Location Theories," CEPR Discussion Papers 2767, C.E.P.R. Discussion Papers.
  4. Inmaculada Martínez-Zarzoso & Felicitas Nowak-Lehmann, 2003. "Augmented Gravity Model: An Empirical Application to Mercosur-European Union Trade Flows," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 291-316, November.
  5. Henry G Overman & L Alan Winters, 2005. "The port geography of UK international trade," Environment and Planning A, Pion Ltd, London, vol. 37(10), pages 1751-1768, October.
  6. Justman, Moshe & Thisse, Jacques-Francois & van Ypersele, Tanguy, 2005. "Fiscal competition and regional differentiation," Regional Science and Urban Economics, Elsevier, vol. 35(6), pages 848-861, November.
  7. Andrés Rodríguez-Pose & Ugo Fratesi, 2003. "Between development and social policies: the impact of European Structural Funds in Objective 1 Regions," European Economy Group Working Papers 28, European Economy Group.
  8. Mauricio Mesquita Moreira, 2007. "Trade Costs and the Economic Fundamentals of the Initiative for Integration of Regional Infrastructure in South America (IIRSA)," IDB Publications (Working Papers) 9278, Inter-American Development Bank.
  9. Combes, Pierre-Philippe & Lafourcade, Miren, 2011. "Competition, market access and economic geography: Structural estimation and predictions for France," Regional Science and Urban Economics, Elsevier, vol. 41(6), pages 508-524.
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