Geography, Policy, or Productivity? Regional Trade in Five South American Countries, 1910–50

31 Pages Posted: 19 Jan 2018

See all articles by Marc Badia‐Miró

Marc Badia‐Miró

University of Barcelona

Anna Carreras‐Marín

University of Barcelona

Christopher M. Meissner

University of California, Davis

Date Written: February 2018

Abstract

Regional trade in South America since independence has long been much smaller than would be expected if geography were the only constraint on trade. Several potential explanations exist, including low technological and demand complementarities; low productivity; and high natural and policy barriers to trade. Focusing on the latter explanations, policy makers have long advocated a South American/Southern Cone Free Trade Area—proposed as early as 1889. Would reductions in trade costs have been sufficient to raise trade significantly, or was trade low for other reasons? We study bilateral trade between 1910 and 1950, when large external shocks altered global supply and demand. These shocks help us show that intra‐regional trade could have been boosted by reductions in trade costs. Trade among Argentina, Bolivia, Brazil, Chile, and Peru could have benefited from more benign trade policies or better infrastructure. Regional trade in textiles, which took off from the 1930s, supports our argument that trade improved when trade costs fell.

Suggested Citation

Badia‐Miró, Marc and Carreras‐Marín, Anna and Meissner, Christopher M., Geography, Policy, or Productivity? Regional Trade in Five South American Countries, 1910–50 (February 2018). The Economic History Review, Vol. 71, Issue 1, pp. 236-266, 2018, Available at SSRN: https://ssrn.com/abstract=3105006 or http://dx.doi.org/10.1111/ehr.12539

Marc Badia‐Miró (Contact Author)

University of Barcelona

Gran Via de les Corts Catalanes, 585
Barcelona, 08007
Spain

Anna Carreras‐Marín

University of Barcelona

Gran Via de les Corts Catalanes, 585
Barcelona, 08007
Spain

Christopher M. Meissner

University of California, Davis ( email )

One Shields Avenue
Apt 153
Davis, CA 95616
United States

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