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Short-run Regional Effects of Alternative Strategies for Economic Integration: The Case of Brazil

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  • Edson Domingues
  • Eduardo Haddad
  • Fernando Perobelli

Abstract

Motivated by both economic and political objectives, Brazil has been pursuing, in recent years, different trade arrangements in an attempt to reinforce strategic impulses for economic development. In this paper, alternative strategies of economic integration are evaluated from the Brazilian perspective. Traditional trade gains and losses are considered in a cost-competitiveness approach, based on relative changes in the industrial cost and demand structures. In the first part of the analysis, a national computable general equilibrium model is used in order to assess the first-round impacts of three alternative trade liberalization scenarios. The main findings indicate that general trade agreements under WTO negotiations are preferable to either the implementation of a free trade area in the Americas or regional agreements involving Mercosur and the European Union. However, each trade arrangement would entail differential structural impacts that serve to different development purposes. In the second part, a Machlup-Goodwin-type interregional model is integrated to the CGE model in order to generate a top-down disaggregation of the national results. Spatial implications of the trade policies are assessed, showing that the trade strategies examined are likely to increase regional inequality in the country.

Suggested Citation

  • Edson Domingues & Eduardo Haddad & Fernando Perobelli, 2001. "Short-run Regional Effects of Alternative Strategies for Economic Integration: The Case of Brazil," ERSA conference papers ersa01p210, European Regional Science Association.
    • Handle: RePEc:wiw:wiwrsa:ersa01p210
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    References listed on IDEAS

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    Cited by:

    1. Edson Paulo Domingues & Kênia Barreiro de Souza, 2012. "The Welfare Impacts of Changes in the Brazilian Domestic Work Market," Working Papers 96, International Policy Centre for Inclusive Growth.
    2. Edson Paulo Domingues & Mauro Borges Lemos, 2004. "Regional impacts of trade liberalization strategies in Brazil," Textos para Discussão Cedeplar-UFMG td234, Cedeplar, Universidade Federal de Minas Gerais.
    3. Fachinello, Arlei Luiz & Ferreira Filho, Joaquim Bento de Souza, 2008. "Análise Dos Reflexos Econômicos Derivados De Surtos Da Gripe Aviária No Brasil Utilizando Um Modelo De Equilíbrio Geral Computável," 46th Congress, July 20-23, 2008, Rio Branco, Acre, Brazil 110071, Sociedade Brasileira de Economia, Administracao e Sociologia Rural (SOBER).
    4. Domingues, Edson P. & Haddad, Eduardo A. & Hewings, Geoffrey, 2008. "Sensitivity analysis in applied general equilibrium models: An empirical assessment for MERCOSUR free trade areas agreements," The Quarterly Review of Economics and Finance, Elsevier, vol. 48(2), pages 287-306, May.

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