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International Borders, Integration and Economic Development: Evidence from Argentina

Author

Listed:
  • Maffini, Nazarena Delicia

    (Universidad Nacional de Misiones, Posadas, Argentina)

  • González, Fernando Antonio Ignacio

    (Universidad de Buenos Aires, Buenos Aires, Argentina)

Abstract

This paper analyzes the effects of international borders and of trade agreements on subnational development in Argentina. The identification strategy leverages the Mercosur trade services agreement in 2005, and the different proximity of the districts to the international border with member countries. Two main outcomes are analyzed: economic growth and inequality. For this purpose, an annual panel of districts covering more than two decades (1992-2013) is used. The results show that the presence of an international border has a negative and significant effect on the economic growth of border districts (-0.14 percentage points of GDP annually) but also contributes to reducing inequality compared to districts without a border. On the other hand, a commercial integration agreement tends to partially offset the negative effects on economic growth (+0.04 percentage points of GDP annually). The results of the paper are relevant in terms of trade and development policy recommendations: deepening integration agreements constitutes a potential mechanism to boost growth in the poorest regions and thus reduce subnational disparities.

Suggested Citation

  • Maffini, Nazarena Delicia & González, Fernando Antonio Ignacio, 2023. "International Borders, Integration and Economic Development: Evidence from Argentina," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 38(4), pages 545-570.
    • Handle: RePEc:ris:integr:0886
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    More about this item

    Keywords

    international border; trade agreement; Mercosur; economic development; growth; inequality;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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