BMARIA27: Aplicaes

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B-MARIA-27 Aplicações

• Prof. Dr. Eduardo A. Haddad
• Departamento de Economia, FEA/USP e FIPE

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Aplicações

• Duplicação da BR-381
• Reaching the planner
• Abertura comercial e pobreza
• Integração micro-macro
• Eficiência portuária
• Links e nós

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Relembrando...
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Transportation Costs

• Prices paid for commodity i from region s in
  region q by each user equate to the sum of its
  basic value and the costs of the relevant taxes
  and margin-commodities
• Margins (transportation services) facilitate
  flows of goods from points of production or
  points of entry to either domestic users or ports
  of exit

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Flowchart with Regional Production Technology in
B-MARIA-27Highlighting the Transportation
Sector
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Average Labor Income, by Sector
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The Role of Transportation Services in
B-MARIA-27 Illustrative Flowchart in a
Two-Region Integrated Framework
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Estimated Logistic Road Transport Cost Function
(Castro et al., 1999)
Used to disaggregate national margins by product
by user
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Calibration

• The calibration strategy adopted takes into
  account explicitly, for each origin-destination
  pair, key elements of the Brazilian integrated
  interstate economic system, namely
• Type of trade involved (margins vary according to
  specific commodity flows)
• Transportation network (distance matters!)
• Distance effects in transportation, in the form
  of long-haul economies
• Increasing returns to transportation

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Simulation

• Integration in the simulation phase
• Changes in the existing physical transportation
  network and implications on costs
• Road improvement, toll, ...
• How to translate such policies into changes in
  the matrix of minimum time distances, mimicking
  potential reductions/increases in the distance
  between two or more points in space?
• Linkage variable amarg_i(s,q,r)

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Simulation

• Model-consistent transfer rate
• In percentage change ( )

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Mecanismo de Funcionamento Relações Causais na
Simulação
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Duplicação da BR-381

• Eduardo Haddad

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Motivação

• Duplicação da rodovia BR-381/MG/SP Fernão Dias
  no trecho entre Belo Horizonte e São Paulo
• Os impactos da etapa de implantação do projeto
  não serão contemplados neste exercício
  ilustrativo
• O objetivo é explorar as características do
  modelo integrado na fase de simulação e não fazer
  uma avaliação sistemática do projeto
• Impactos sobre o crescimento econômico associado
  a ganhos de produtividade regional e nacional,
  além de considerações sobre bem-estar

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Motivação

• 1a fase duplicação de 217 km da pista iniciados
  em Belo Horizonte chegando a Lavras, e os 53 km
  iniciais a partir da capital paulista
• 2a fase 293 km restantes
• Os custos totais da 1a e 2a fases do programa
  foram estimados em US 534 milhões e US 446
  milhões, respectivamente
• Parâmetros definidos para a 2a fase da obra de
  duplicação da BR-381 para efetuarmos nosso
  exercício de simulação

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Simulação

• O cálculo da matriz de tempos mínimos de viagem
  entre as capitais brasileiras, considerando as
  obras de duplicação da Fernão Dias, é feito
  através de simulações em que se atribui
  velocidade máxima em toda a extensão da rodovia a
  ser duplicada igual à velocidade máxima de uma
  rodovia de pista duplicada, a saber, 110 km/h
• Simula-se, então, o tempo de viagem gasto
  partindo-se de cada capital estadual com destino
  às demais capitais, o que é exposto em uma matriz
  quadrada de ordem n 27

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Resultados

• O modelo B-MARIA-27 foi utilizado para estimar os
  impactos de curto prazo e longo prazo da 2a fase
  da obra de duplicação da BR-318, durante seu
  período de operação
• Em termos agregados, os investimentos em questão,
  em sua fase de operação, possuem um impacto
  potencial sobre o crescimento nacional variação
  de 0.0046 do PIB real nacional (equivalente a R
  38.4 milhões) no curto prazo, e 0.0261 (R 215.9
  milhões), no longo prazo

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Resultados

• Podemos utilizar os resultados de estática
  comparativa para projetar o fluxo marginal de
  riquezas na economia. Para tanto, necessitamos de
  informações adicionais sobra a vida útil do
  projeto (20 anos)
• Utilizando este parâmetro, calculamos o valor
  presente (VP) de um fluxo marginal do PIB,
  contínuo e constante ao longo do período (Figura
  4.20), sob taxas de desconto de 3, 5 e 8
• Os valores utilizados referem-se aos efeitos das
  simulações de curto prazo e longo prazo, em R
  milhões de 1996

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Trade Liberalization and Regional Inequality Do
Transportation Costs Impose a Spatial Poverty
Trap?

• Eduardo Haddad
• Fernando Perobelli

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Motivation

• It has been argued that there are still areas
  where further structural reforms are needed in
  Latin America, including scaling back remaining
  high tariffs (World Economic Outlook, April 2003)
• Changes in relative prices might have strong
  implications to the allocation of resources
• Spatial effects
• How does the allocation of resources change
  throughout the adjustment process?
• Winners and losers
• Strong appeal to policymakers

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Motivation

• Moreover, we are concerned with the spatial
  impediments for the internal transmission of the
  potential benefits of trade liberalization, in
  the form of high transportation costs that the
  more remote regions face

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Motivation

• Cross-country studies

Trade liberalization
Economic growth
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Poverty
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Motivation

• Economic geography models
• Mansouri (JRS, 2003)
• Trade liberalization may cause the population of
  a country to become more concentrated into a
  single metropolis (congestion costs)
• Redding and Venables (JIE, 2004)
• Hint on the role of market access
• Trade liberalization may lead to welfare loss of
  developing (more remote) countries

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Motivation

• Can we be more specific about the role
  transportation infrastructure plays in the
  transmission mechanisms of an increase in foreign
  trade?
• Integration of spatial CGE model with geo-coded
  transportation network model
• Comparative advantage
• Geographical advantage

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Simulation

• Basic simulation uniform 25 decrease in all
  tariff rates
• First-round (short run) spatial effects
• Counterfactual simulation implicit
  transportation costs associated with hypothetical
  import corridors
• Information on ports of entry of state imports
• Effective cost (transborder cost and the cost of
  shipping the goods from the ports of entry to the
  place of consumption) versus transborder costs

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Distribution of Brazilian Exports and Imports by
Transport Modes
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Transborder and Import Corridor Costs By
State(In of Total Value of Basic Flows of
Imported Goods)
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Spatial Results

• Decomposition of the net effects associated with
  the import corridors costs
• Identify the sources of market imperfections that
  affect state performance related to trade
  liberalization

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Decomposition of Net Effects of Transportation
Costs on the Impacts of Tariff Reductions on
Regional Growth (Real GSP) By Import Corridors
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Decomposition of Net Effects of Transportation
Costs on the Impacts of Tariff Reductions on
Regional HH Disposable Income By Import
Corridors
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Epilogue Poverty Effects

• Poverty effects of trade reforms are estimated
  using a top-down approach (non-behavioral
  micro-simulation)
• Based on Bussolo (2004)
• No feedback from the micro module to the macro
  model is explicitly accounted for at this stage
• Information from ICGE model, by state
• Sectoral capital income, labor income, government
  transfers, sectoral employment, CPI
• Household survey PNAD 1996
• State poverty lines Rocha (2003)

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Link Between B-MARIA-27 and Household Survey
Update state poverty lines
Changes in employment
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Final Remarks

• Attempt to elucidate one of the mechanisms that
  link own trade liberalization and subsequent
  growth and regional inequality
• Only one side of the token
• Constraints towards export expansion can also be
  perceived as a further barrier to link trade
  liberalization and growth
• Investments in transportation appear to have been
  oriented towards supporting increased exports
• Role of export corridors must be considered in
  order to grasp the holistic picture

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Decomposition of Net Effects of Transportation
Costs on the Impacts of Tariff Reductions on
Regional Growth (Real GSP) By Import/Export
Corridors
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Final Remarks

• CGE results mapped to the detailed information
  available in the household survey
• More complex and useful analysis of the poverty
  impact provided
• Better assessment of the role of transportation
  policies as (compensatory) structural regional
  policies
• How to deal with spatial factor mobility in MS?

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Port Efficiency and Regional Development

• Eduardo Haddad
• Geoffrey Hewings
• Raul Antonio dos Santos

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Motivation
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Integration of CGE models and transportation
networks

• Modest but expanding literature
• Initial focus on spatial CGE models (e.g. Roson)
• Kim et al Korea
• Multi-regional CGE model
• Examined optimal link construction strategies for
  major network expansion in highway network
  infrastructure
• Considered link and system-wide (synergetic)
  interactions

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Integration of CGE models and transportation
networks

• Kim et al. US
• Integration of interregional commodity flow model
  and highway/rail transportation network to
  consider impacts of earthquake disruption
• Haddad and Hewings Brazil
• Explored role of market imperfections
• Focused on role of scale economies and
  transportation costs
• Latter much more important in terms of welfare
  impacts

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Unresolved issues

• Integration focused on network structure
• Modal choice
• Congestion functions on links
• Route choice and path identification (e.g. Lee,
  2005)
• No consideration of nodal congestion
• e.g. US railroads and Chicago (48 hours
  LA-Chicago, 18 hours Chicago-NY but 36-130 hours
  within Chicago)
• Unlike highway link, congestion at port may have
  severe impacts spread over space and time whereas
  highway link congestion may be resolved within
  several hours

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Unresolved issues

• Modeling issues
• How to include a nodal congestion function
• Consideration of regulation and spatial
  competition (competing destinations/origins/transf
  er)
• Shipper/carrier/transfer agent issue
• Shipper minimize O-D transportation costs
• Carrier allocate shippers goods to different
  modes or combination of modes
• Transfer agent (port) attracting different
  modes to use specific ports

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Unresolved issues

• For port
• How much investment to reduce transfer costs?
• Specialize (e.g. in containers or handling
  particular cargoes)?
• Dependency on links with the hinterland
• Clark et al. (2004) found that in Latin American
  shipments to the US, moving from 25th to 75th
  percentile in port efficiency reduced total
  shipping costs by 12

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First steps

• Assume transportation costs for export/import
  include two components
• Link costs (internally and externally)
• Transfer costs at the port (function of volume
  and capacity)

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First steps

• Assume standard network with nodes and links
• At port, introduce a self-link to capture the
  transfer costs

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First steps

• Adopt functional form similar to ones used for
  congestion function on links
• Assume there is a self link at port in which
  transfer costs are constant per unit up to a
  certain level and then rise exponentially until
  capacity is reached

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First steps

• Need to formulate a model of imperfect
  competition among the ports
• Different capacities
• Different hinterland connectivities restrict the
  degree to which one port can serve as substitute
  for another i.e., trade areas imperfectly
  overlap
• Since port is part of the transportation network,
  any congestion/disruptions likely to ripple
  throughout the hinterland

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Port efficiency

• Port costs may be seen as an additional barrier
  to trade
• Determinants of port efficiency
• Activities that depend on port infrastructure
  (e.g. pilotage, cargo handling, among others)
• Activities related to customs requirements (e.g.
  legal restrictions, port management, etc.)
• Port efficiency varies widely from country to
  country

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The Brazilian Case
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• Minas Gerais 78.66 of total imports by
  navigation mode,
• from which 35.4 enter from ports in ES, 34.1
  from RJ,
• 28.7 from SP, 1.4 from PR, 0.4 from SC and
  0.1 from PE
• Rio Grande do Sul 78.37 of total imports by
  navigation mode,
• from which 94.9 enter from ports within the
  state, 4.1 from SP,
• 0.5 from SC, 0.3 from PR, and 0.1 from RJ

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Transborder and Import Corridor Costs By
State(In of Total Value of Basic Flows of
Imported Goods)
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Internal Transfer Costs as a Barrier to Trade
Costs that accrue to import flows (port plus
inland costs)
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Simulations
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Simulations

• Basic simulation uniform 25 decrease in all
  transborder rates (efficiency gains)
• First-round (short run) spatial effects
• Benchmark simulation trade liberalization
  considering implicit transportation costs
  associated with hypothetical import/export
  corridors
• Information on ports of entry (exit) of state
  imports (exports)
• Effective cost (transborder cost and the cost of
  shipping the goods from the ports of entry to the
  place of consumption) versus transborder costs

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Benchmark simulation

• Haddad and Perobelli (2005)
• It has been argued that there are still areas
  where further structural reforms are needed in
  Latin America, including scaling back remaining
  high tariffs (World Economic Outlook, April 2003)
• Changes in relative prices might have strong
  implications to the spatial allocation of
  resources
• How does the allocation of resources change
  throughout the adjustment process?
• Winners and losers
• Strong appeal to policymakers

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Benchmark simulation

• Haddad and Perobelli were concerned with the
  spatial impediments for the internal transmission
  of the potential benefits of trade
  liberalization, in the form of high
  transportation costs that the more remote regions
  face (INLAND COSTS LINKS)
• Explicit modeling of space
• How about port efficiency issues (NODES)?
• Put them into perspective

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Benchmark simulation

• Main results
• Regarding regional performance in terms of real
  GSP growth, note the negative impact high
  transportation costs impose to the (more remote)
  regions.
• Overall, states more remotely located both in
  terms of distance from the central position or
  access to ports are more adversely affected.
• Two spatial regimes coastal and hinterland

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Decomposition of Net Effects of Transportation
Costs on the Impacts of Tariff Reductions on
Regional Growth (Real GSP) By Import/Export
Corridors (Haddad and Perobelli, 2005)
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Basic simulation

• Increase port efficiency (25)
• Design of the shocks (import flows)
• Shock amarg_i("foreign","state","OTS")
• f (share of state imports by navigation,
• distribution of imports by ports of entry,
• exisiting relative efficiency among
  ports)

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Relative Port Efficiency
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Effects on Real Gross Regional Product
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Spatial Results GSP Ports of Entry
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Final Remarks
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Final remarks

• Attempt to elucidate one of the mechanisms that
  link trade barriers (port efficiency) and
  subsequent growth and regional inequality
• Only one side of the coin
• AGAIN!

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Spatial Results GSP Ports of Exit
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Spatial Results GSP The Whole Picture
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Spatial Results GSP The Whole Picture
Primary exporters
Intermediate space
Global players
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Spatial regimes

• Primary exporters
• Localized links/nodes
• Specific/scattered economic space(s)
• Intermediate space
• Transition
• Role played domestic markets
• Global players
• Port efficiency affects overall competitiveness
• Dense economic space

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Policy implications

• Enhance coastal (C-S) effect concentration!
• The role of transportation policies as
  compensatory regional policies
• Investment in improving capacity of links needs
  to be complemented by improvements in nodal
  efficiency (break-even point in center-west is
  12 higher than on southern farms because of
  higher transportation costs)
• Nodal bottlenecks present more important
  challenge because of the scale of the investment
  required
• Need to capture two-way impacts of improvement in
  port efficiency