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Journal of Economic Integration 2023 December;38(4) :545-570.
DOI: https://doi.org/10.11130/jei.2023.38.4.545
International Borders, Integration and Economic Development: Evidence from Argentina

Nazarena Delicia Maffini 1 and Fernando Antonio Ignacio González 2

1Universidad de Buenos Aires, Buenos Aires, Argentina
2Universidad Nacional de Misiones, Posadas, Argentina
Corresponding Author: Fernando Antonio Ignacio González ,Email: fernando.gonzalez@fce.unam.edu.ar
Copyright ©2023 Journal of Economic Integration
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.

JEL Classification
D31: Personal Income, Wealth, and Their Distributions
F14: Empirical Studies of Trade
F15: Economic Integration
F43: Economic Growth of Open Economies
I30: General
R12: Size and Spatial Distributions of Regional Economic Activity
Keywords: international border | trade agreement | Mercosur | economic development | growth | inequality
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