Trade Openness and Regional Inequality: Case of Tunisia

##plugins.themes.bootstrap3.article.main##

  •   Hamza Ben Younes

  •   Fayçal Ben Ameur

Abstract

Since the 1990s, Tunisia has experienced an increasingly pronounced trade openness and has adopted a multitude of reforms to reinforce it through a large number of agreements with different foreign partners. However, this openness has gone simultaneously with an increase in regional inequalities wish have continued to grow, that is why we are interested in verifying, on one side, how this openness affects economic growth and, on the other one, whether it increases regional disparities within the country over the period (1990-2018). We start from the hypothesis that if trade openness manages to boost economic growth, its positive outcomes can have a contrasting effect at the regional level, benefiting some regions to the detriment of others. By crossing this double effect openness can accentuate territorial imbalances. We will use panel data econometrics to estimate our model. We will test the effect of openness on territorial disparities for the Tunisian case, especially between the 24 governorates where, there is no measure of regional inequalities yet, hence the interest of this study. Our econometric analysis clearly shows that the differences in endowments and characteristics at the level of the regions, such as differences in infrastructure or human capital, positively affect regional inequalities. Openness also appears to be a factor of positive influence, in particular by enhancing the polarization of economic activities and FDI within certain regions to the detriment of others.

Keywords: Panel Data, Regional Inequality, Trade Openness, Tunisia.

References

Acemoglu, D., Johnson, S., & Robinson, J. A. (2005). Institutions as a fundamental cause of long-run growth. Handbook of economic growth, 1, 385-472.

Ades, A. F., & Glaeser, E. L. (1995). Trade and circuses: explaining urban giants. The Quarterly Journal of Economics, 110(1), 195-227.

Bakker, J. D. (2018). International trade and regional inequality (No. 1806). CEPREMAP.

Barro, R., & Lee, J. (1994). Sources of economic growth. Carnegie-Rochester Conference Series on Public Policy, 40(1), 1-46; Elsevier.

Baylis, K., Garduño-Rivera, R., & Piras, G. (2009). The distributional effects of NAFTA in Mexico: Evidence from a panel of municipalities. Regional Science and Urban Economics, 42(1-2), 286-302.

Beck, N., & Katz, J. N. (1995). What to do (and not to do) with time-series cross-section data. American Political Science Review, 89(3), 634-647.

Behrens, K. (2003). International trade and internal geography revisited (Doctoral dissertation, Laboratoire d'analyse et de techniques économiques (LATEC)).

Benhabib, J., & Spiegel, M. M. (1994). The role of human capital in economic development evidence from aggregate cross-country data. Journal of Monetary Economics, 34(2), 143-173.

Brülhart, M., Carrère, C., & Robert-Nicoud, F. (2018). Trade and towns: Heterogeneous adjustment to a border shock. Journal of Urban Economics, 105, 162-175.

Catin, M., & Ghio, S. (2004). Stages of regional development and spatial concentration. Région et Développement, 19, 185-221.

Catin, M., & Van Huffel, C. (2004). L’impact de l’ouverture économique sur la concentration spatiale dans les pays en développement. Région et Développement, 20, 123-157. French.

Catin, M., & Van Huffel, C. (2004). Ouverture économique et inégalités régionales de développement en Chine : le rôle des institutions. Mondes en Développement, (4), 7-23. French.

Chai, J. C. (1996). Divergent development and regional income gap in China. Journal of Contemporary Asia, 26(1), 46-58.

Charlot, S., & Schmitt, B. (1999). Public infrastructure and economic growth in France's regions. Paper No. 129. ERSA 39th Congress, Dublin, Ireland.

Connolly, M. (2003). The dual nature of trade: measuring its impact on imitation and growth. Journal of Development Economics, 72(1), 31-55.

Crozet, M., & Koenig-Soubeyran, P. (2002). EU Enlargement and industrial relocation within the CEECs. Manuscript, TEAM–Paris. 1. VIIth Spring Meeting of Young Economists, Paris, 19 April, 2002.

Daumal, M. (2013). The impact of trade openness on regional inequality: the cases of India and Brazil. The International Trade Journal, 27(3), 243-280.

Daumal, M., & Ozyurt, S. (2010). The Impact of International Trade Flows on the Growth of Brazilian States. In Document De Travail, DT/2010–01.

Domecq, J. P., & Regnault, H. (1990). Tunisie : DIT, développement littoral, stagnation intérieure. RERU. Revue Régionale d'Economie Urbaine, (4), 523-533. French.

El Bekri, F. (2000). Disparités régionales et développement en Tunisie. Revue d'économie régionale et urbaine, (5), 887-914. French.

Faber, B. (2007). Towards the spatial patterns of sectoral adjustments to trade liberalisation: The case of NAFTA in Mexico. Growth and Change, 38(4), 567-594.

Fajgelbaum, P. D., & Redding, S. J. (2014). External integration, structural transformation and economic development: Evidence from Argentina 1870-1914, National Bureau of Economic Research, Working Paper 20217.

Farole, T. (2013). Trade Openness and Regional Inequality. The Internal Geography of Trade, 33-63.

Fazekas, K. (2005). Effects of FDI inflows on regional labour market differences in Hungary. Economie Internationale, (2), 83-105.

Figlio, D. N., & Blonigen, B. A. (2000). The effects of foreign direct investment on local communities. Journal of Urban Economics, 48(2), 338-363.

Ford, T. C., Logan, B., & Logan, J. (2009). NAFTA or Nada? Trade's impact on US border retailers. Growth and Change, 40(2), 260-286.

Fu, X. (2004). Limited linkages from growth engines and regional disparities in China. Journal of Comparative Economics, 32(1), 148-164.

Ge, Y. (2009). Globalization and industry agglomeration in China. World Development, 37(3), 550-559.

Gelan, A. (2003). Local economic impacts: the British open. Annals of tourism research, 30(2), 406-425.

Ghio, S., & Van Huffel, C. (1999). Politiques de libéralisation commerciale dans les pays en développement et niveaux d’infrastructures: les effets sur l'hyperconcentration urbaine. Stratégies, concurrence et mutations industrielles. French.

González Rivas, M. (2007). The effects of trade openness on regional inequality in Mexico. The Annals of Regional Science, 41(3), 545-561.

Hanson, G. H. (1997). Increasing returns, trade and the regional structure of wages. The Economic Journal, 107(440), 113-133.

Hanson, G.H. (1998). Market Potential, Increasing Returns, and Geographic Concentration. NBER Working Paper 6429.

Henderson, J. R. (2002). Will the rural economy rebound with the rest of the nation? Economic Review-Federal Reserve Bank of Kansas City, 87(1), 65-83.

Henderson, V. (1997). Medium-sized cities. Regional Science and Urban Economics. 27, 583-612.

Heo, S. & Oh, J. (2015). The effects of trade openness on regional inequality in South Korea, 55th Congress of the European Regional Science Association: World Renaissance: Changing Roles for People and Places, 25-28 August 2015, Lisbon, Portugal, European Regional Science Association (ERSA), Louvain-la-Neuve.

Hsu, C. M., & Liu, W. C. (2004). The role of Taiwanese foreign direct investment in China: Economic integration or hollowing-out? Korea and the World Economy, 5(2), 207-231.

Jones, D. C., & Cheng, L. (2003). Growth and regional inequality in China during the reform era. China Economic Review, 14(2), 186-200.

Jordaan, J. A. (2008). State characteristics and the locational choice of foreign direct investment: Evidence from regional FDI in Mexico 1989–2006. Growth and Change, 39(3), 389-413.

Kanbur, R., & Zhang, X. (1999). Which regional inequality? The evolution of rural–urban and inland–coastal inequality in China from 1983 to 1995. Journal of Comparative Economics, 27(4), 686-701.

Karray, Z., & Driss, S. (2009). Structure industrielle, économies d’agglomération, ouverture et croissance régionale en Tunisie. Région et Développement, 29(2), 141-57. French.

Kennedy, P. (2008). A guide to econometrics. John Wiley & Sons.

Krueger, A. B., & Lindahl, M. (2001). Education for growth: Why and for whom? Journal of Economic Literature, 39(4), 1101-1136.

Krugman, P., & Elizondo, R. L. (1996). Trade policy and the third world metropolis. Journal of Development Economics, 49(1), 137-150.

Lanaspa, L., Pueyo, F., & Sanz, F. (2003). The evolution of Spanish urban structure during the twentieth century. Urban Studies, 40(3), 567-580.

Lin, J. Y., & Liu, Z. (2000). Fiscal decentralization and economic growth in China. Economic Development and Cultural Change, 49(1), 1-21.

Martin, P., & Rogers, C. A. (1994). Trade effects of regional aid (No. 910). CEPR Discussion Papers.

Métral, A. (2003). Forces centrifuges et forces centripètes autour de la métropole tunisoise. Les entrepreneurs locaux, acteurs de la localisation industrielle. Revue d’Economie Regionale Urbaine, (2), 267-290. French.

Monfort, P., & Nicolini, R. (2000). Regional Convergence and International Integration. Journal of Urban Economics, 48(2), 286-306.

Moomaw, R. L., & Shatter, A. M. (1996). Urbanization and economic development: a bias toward large cities? Journal of Urban Economics, 40(1), 13-37.

Mullen, J. K., & Williams, M. (2005). Foreign direct investment and regional economic performance. Kyklos, 58(2), 265-282.

Najeh, A. (2015). Aux sources des disparités géographiques en Tunisie : la contribution du modèle de développement socio-économique, de la croissance économique et du facteur institutionnel (Doctoral dissertation, Université Montpellier).

Nelson, R. R., & Phelps, E. S. (1966). Investment in humans, technological diffusion, and economic growth. The American economic review, 56(1/2), 69-75.

Özyurt, S., & Daumal, M. (2013). Trade openness and regional income spillovers in Brazil: a spatial econometric approach. Papers in Regional Science, 92(1), 197-215.

Paluzie, E. (2001). Trade policy and regional inequalities. Papers in regional science, 80(1), 67-85.

Paluzie, E., Pons, J., & Tirado, D. A. (2001). Regional integration and specialization patterns in Spain. Regional studies, 35(4), 285-296.

Parks, R. W. (1967). Efficient estimation of a system of regression equations when disturbances are both serially and contemporaneously correlated. Journal of the American Statistical Association, 62(318), 500-509.

Pritchett, L. (2001). Where has all the education gone? The World Bank Economic Review, 15(3), 367-391.

Rodríguez-Pose, A. (2012). Trade and Regional Inequality, Economic Geography, Taylor & Francis Journals, 88(2), 109-136.

Rodríguez-Pose, A., & Sánchez-Reaza, J. (2003). Economic polarization through trade: Trade liberalization and regional growth in Mexico. Discussion Paper, 2003/60. Finland: Wider-United Nations University.

Sala-i-Martin X. (2002b), the world distribution of income (estimated from individual country distribution), NBER Working Paper 8933.

Sánchez‐Reaza, J., & Rodríguez‐Pose, A. (2002). The impact of trade liberalization on regional disparities in Mexico. Growth and change, 33(1), 72-90.

Shantong, L., & Fan 1, Z. (2002). China’s WTO accession and implications for its regional economies. Économie Internationale, (4), 67-101.

Solow, R. M. (1957). Technical change and the aggregate production function. The Review of Economics and Statistics, 39(3), 312-320.

Venables, T. (2000). Cities and Trade: external trade and internal geography in developing countries. World Development Report, Entering the 21st Century.

Downloads

Download data is not yet available.

##plugins.themes.bootstrap3.article.details##

How to Cite
Younes, H. B., & Ameur, F. B. (2023). Trade Openness and Regional Inequality: Case of Tunisia. European Journal of Business and Management Research, 8(1), 47–55. https://doi.org/10.24018/ejbmr.2023.8.1.1778