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Trade and infrastructure in the Andean Community



This paper examines the key role of infrastructure in Andean Community trade patterns, using three gravity models. The first identifies the importance of preferential trade agreements and of geographical adjacency. The second and third models encompass these aspects while focusing on the inclusion of infrastructure in the gravity equation, testing the assumption that infrastructure endowments reduce "distance" (in terms of transport costs); between partners. Under the new trade arrangements, borders and previous agreements will lose significance, trade will be virtually free and bilateral flows will be defined in terms of costs and competitiveness. Competitiveness, however, can be achieved only by means of an improvement in infrastructure at all points in the production-distribution chain.

Includes bibliography

Comisión Económica para América Latina y el Caribe (CEPAL) - Biblioteca Hernán Santa Cruz

Héctor Aracena

Biblioteca CEPAL, Edificio Naciones Unidas, Av. Dag Hammarskjold 3477, Santiago, Chile

(+56-2) 2210-2337

Address: Av. Mariscal Antonio José de Sucre N58-63 y Fernández Salvador Edif. Olade - San Carlos, Quito - Ecuador.

Web: www.olade.org

Phone: (593 2) 259 8122 / 2598 280

Correo: realc@olade.org

Desarrollado por: Aikyu-Systems