Comparative Perspectives on Trade Cost Geography: Latin American Insights

Globalization and international trade have been longstanding focal points in economic research and global political agendas. However, the recent surge in protectionist policies has necessitated a reevaluation of the role of trade in the global economy. This research aims to scrutinize the process of international economic integration among various countries in recent decades, with a particular emphasis on Latin American economies. A comprehensive analysis of trade costs across countries is imperative for comprehending the dynamics and patterns of this integration. To accomplish this objective, novel indicators have been devised leveraging comprehensive databases and utilizing Structural Gravity Models with the latest available data. The results underscore the diverse nature of reductions in trade costs across regions and countries. Geography and asymmetry play a pivotal role in comprehending trade costs. Typically, developed economies experience lower trade costs, while emerging economies in Asia have notably gained from globalization. Conversely, Latin America has encountered obstacles in enhancing global market access through trade tariff policies. Additionally, upon comparing the gains attained by exporters against those of consumers, it becomes apparent that globalization has conferred more consistent advantages upon exporters, whereas consumers have encountered greater variability in the benefits. Notably, Asian consumers have emerged as primary beneficiaries, in contrast to Latin American consumers who have experienced comparatively modest advancements. Within Latin American countries, heterogeneity stands out as its primary characteristic, with economies displaying varying outcomes in reducing trade costs. While some have shown progress, others lag behind without significant advancements, remaining more isolated.