Ramon-Berjano, Carola B
(2004)
Socio-economic disparities in Argentina and Brazil. Origins, evolution and external variables that affect regional convergence: The implications for integrated areas.
PhD thesis, London School of Economics and Political Science.
Abstract
This thesis studies regional economic disparities both within individual countries as well as between countries. The main objective is to determine whether regional disparities converge automatically through time and, if this is not the rule, whether regional policies are needed. This thesis argues that disparities, far from converging automatically, can persist not only through time but also be affected by policies and external factors. The issue of convergence of regional incomes becomes significant when considering the case of integrated areas. In this thesis I study the potential effects that the deepening of MERCOSUR will have on disparities both between as well as within the member countries by focusing on Argentina and Brazil, the two largest countries within the area, up until the late 1990s. In order to analyse disparities within integrated areas, the European Union will be considered as a frame of reference. I show that although regional policies appear to have favoured convergence, this has not been as significant as expected, particularly within the regions. In addition, Argentina and Brazil will be analysed, and I trace the origin of national disparities to late colonial times. Further, regional disparities within both countries have not shown any major trends towards convergence over the centuries. Moreover, political and macroeconomic factors do seem to have an incidence in the process of regional convergence within those countries. Also, different subperiods display convergence and divergence. Both the European Union experience as well as that of Argentina and Brazil indicate that disparities were not reduced automatically as neo-classical economics predict. I also refer to macroeconomic and political factors having an impact in the process of convergence, diverting these regions away from their convergence paths. Another important factor in the automatic process of convergence as described in neo-classical economics is the interregional mobility of factors. However, this does not seem to have been the case for either the European Union or Argentina and Brazil. The thesis seeks to provide an insight into how disparities evolve through time and its conclusions will not only be useful in terms of regional policy planning in Argentina and Brazil but also in the process of deepening in MERCOSUR and a possible Latin American integration. The comparison with the European Union experience provides a more general frame of reference for other integration schemes around the world. The conclusions should provide a better insight into the problem of unbalanced growth not only for individual countries but also for integrated areas.
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