Trade Networks in Latin America : Spatial Inefficiencies and Optimal Expansions
How do trade connectivity issues affect the efficient spatial distribution of economic activity within and across countries in Latin America This paper uses a spatial general equilibrium framework to construct optimal transport networks and optimal...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2021
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/undefined/936651636137366844/Trade-Networks-in-Latin-America-Spatial-Inefficiencies-and-Optimal-Expansions http://hdl.handle.net/10986/36555 |
| Summary: | How do trade connectivity issues
affect the efficient spatial distribution of economic
activity within and across countries in Latin America This
paper uses a spatial general equilibrium framework to
construct optimal transport networks and optimal expansions
to existing networks in most Latin American countries, as
well as within MERCOSUR and the Andean Community. The paper
assesses the average annual welfare losses due to
inefficient domestic road networks in Latin America at 1.7
percent, ranging from 2.5 percent in Brazil to 0.2 percent
in El Salvador. Spatial misallocation of transnational road
networks is associated with annual welfare losses of 1.8
percent in MERCOSUR and 1.6 percent in the Andean Community.
Optimal investments in improvements and expansions of
existing networks can correct these inefficiencies and
reduce spatial inequality within countries. These
investments correlate relatively well with World Bank road
projects because both the model and the World Bank
prioritize investments in high population areas.
Transnational road improvements benefit the most the least
developed country in each trade bloc. The results are robust
to changes in data sources and model assumptions. |
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