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Geography, Policy, or Productivity? Regional Trade in five South American Countries, 1910-1950

Listed author(s):
  • Marc Badia-Miró
  • Anna Carreras-Marín
  • Christopher M. Meissner

Regional trade in South America since independence has long been much smaller than would be expected if geography were the only constraint on trade. Several potential explanations exist: low technological and demand complementarities; low productivity; high natural and policy barriers to trade. Focusing on the latter explanations, policy makers have long advocated a South American/Southern Cone Free Trade Area–proposed as early as 1889. Would reductions in trade costs have been sufficient to significantly raise trade, or was trade low for other reasons? We study bilateral trade between 1910 and 1950, when large external shocks altered global supply and demand. These shocks help us show that intra-regional trade could have been boosted with reductions in trade costs. South American regional trade could have benefitted from more benign trade policy or better infrastructure. Regional trade in textiles, which took off from the 1930s, supports our argument that trade improved when trade costs fell.

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File URL: http://www.nber.org/papers/w20790.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 20790.

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Date of creation: Dec 2014
Handle: RePEc:nbr:nberwo:20790
Note: DAE
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  6. Anna Carreras-Marín & Marc Badia-Miró & José Peres Cajías, 2013. "Intraregional Trade in South America, 1912-1950: The Cases of Argentina, Bolivia, Brazil, Chile and Peru," Economic History of Developing Regions, Taylor & Francis Journals, vol. 28(2), pages 1-26, December.
  7. Mauricio Mesquita Moreira & Christian Volpe Martincus & Juan S. Blyde, 2008. "Unclogging the Arteries: The Impact of Transport Costs on Latin American and Caribbean Trade," IDB Publications (Books), Inter-American Development Bank, number 13138, February.
  8. J. M. C. Santos Silva & Silvana Tenreyro, 2006. "The Log of Gravity," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 641-658, November.
  9. José Díaz & Gert Wagner, 2004. "Política Comercial: Instrumentos y Antecedentes. Chile en los Siglos XIX y XX," Documentos de Trabajo 223, Instituto de Economia. Pontificia Universidad Católica de Chile..
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