Pedro E. Moncarz

Regionalism as Industrial Policy: Evidence from Mercosur

This paper empirically explores whether trade preferences can be used as a substitute for industrial policy and help countries achieve their industrialization objectives at the expense of other regional members. Results show that Mercado Comun del Sur (MERCOSUR) preferences obtained by Brazilian exporters have led to an increase in exports of relatively sophisticated products in which Brazil does not enjoy a global comparative advantage. On the contrary, smaller members of MERCOSUR export to the region products in which they have strong comparative advantages and with relatively low levels of sophistication. This suggests that MERCOSUR has helped Brazil achieve its industrialization objectives, but has not contributed to the industrialization of its smaller members.

Who Wins in South-South Trade Agreements? New Evidence for MERCOSUR

Using a detailed database on intra-MERCOSUR tariffs, we estimate the effect of tariff preferences on the origin of imports of MERCOSUR members. The results show tariff preferences affected imports patterns in the cases of Argentina and Uruguay, and to a less extent also those of Brazil. For the first two countries the results support the hypothesis that MERCOSUR has produced a diversion of trade, no similar evidence is found for Brazil and Paraguay.

Poverty Impacts of Changes in the International Prices of Agricultural Commodities: Recent Evidence for Argentina (An Ex-Ante Analysis)

Abstract Argentina has benefited greatly from the increase in prices of agricultural commodities. With a large share of its population with low and medium-low incomes; however, a sizable part of households is likely to be adversely affected by the accompanying rise in the price of the consumption basket. An ex-ante analysis suggests that this is the case. Changes through a less obvious channel (that is, in factor incomes) are likely to be more beneficial to middle-income households. In general, all households experience losses, with poorer households being the most affected. When accounting for transfers financed through the collection of export taxes, poorer households benefit. In the absence of compensatory measures, increases in the prices of agricultural commodities could potentially have an important impact in terms of indigence and poverty.

Argentina's import patterns: trade preferences and the extensive margin of trade

We estimate the influence of trade preferences granted by Argentina on the origin of its imports. We try to identify if changes in Argentinas trade policy toward a set of countries had a differential effect, depending on whether goods were already traded, or on the contrary, if tariff changes affected mostly imports of new goods. We distinguish between the effects of changing tariffs and changing trade preferences. The econometric evidence shows that the effect of changes in tariff preferences on the probability of Argentina importing from other Asociación Latinoamericana de Integración (ALADI) members has been rather small, with most of the effect being explained by changes in tariff rates levied on imports from these countries. This result is stronger in the case of imports from Brazil.

MERCOSUR's Role on the Regional Patterns of Imports of its Country Members: A Dynamic Panel Data Approach

With the signature of the Asuncion Treaty by Argentina, Brazil, Paraguay and Uruguay in July 1991, the four countries implemented an ambitious program to reduce tariffs and non-tariff barriers on their reciprocal trade; a common policy toward third countries was implemented in 1995. As MERCOSUR deepened further, intra-zone trade increased its share in total trade. In most cases, increasing intra-zone trade meant an increasing participation of goods where MERCOSUR members did not have a RCA at the beginning of the integration process. Starting from Krugman (1980) monopolistic competitive model for international trade we derive an equation to explain regional patterns of imports. Making use of a recently detailed database on intra-MERCOSUR tariffs we estimate the effect of tariff preferences on the origin of imports of MERCOSUR members between 1991 and 2004. The results show tariff preferences affected imports patterns in the cases of Argentina and Uruguay, and to a less extent also those of Brazil and Paraguay. For the first two countries the results appear to sustain the hypothesis MERCOSUR may have induced a trade diversion effect, from which Brazil would have been the most benefited member.

Trade Liberalization and the Spatial Distribution of Economic Activity within a Country

The effects of the liberalization of international trade are analyzed in a New Economic Geography model of a country with an asymmetric distribution of housing between regions. Labour is mobile between regions but not between countries. Trade liberalization tends to reduce inequalities in the distribution of population between the two regions, although population is always more unequally distributed than housing. Results are similar when there is a bias in preferences towards home-produced varieties of manufactures. If consumers care relatively little about housing and transport costs are high enough, an agglomerated equilibrium becomes stable.

Do intergovernmental transfers affect the distribution of manufacturing production across regions in federal countries? Theory and evidence for Argentina

ABSTRACT The effect of changes in the distribution of top-to-bottom intergovernmental transfers on the location of manufacturing production is analysed using a modified version of the footloose capital model. An increase in the share of transfers received by a region increases its share of manufacturing production the larger are transaction costs; the larger is the share of transfers going directly to consumers; the larger is the share of manufacturing consumption vis-à-vis non-tradable consumption; and the easier consumers can substitute among manufacturing varieties. Using data for Argentina for 1983-2005, the empirical analysis appears to support the existence of two distinctive regimes, with smaller/poorer provinces benefiting in terms of the location of manufacturing production as a response to an increase in transfers. Also, for these provinces, the benefits are greater if they are politically aligned with the federal government, especially through the receipt of discretionary transfers. For large/rich provinces, the evidence is less conclusive.