Measure and determinants of border effects of Brazilian states

This paper estimates the degree of trade integration between Brazilian states and the magnitude of barriers faced by their exporters in the 1990s. Using the border effects methodology, we show that the Brazilian market remains highly fragmented, although integration is increasing. In 1991 an average Brazilian state traded 37 times more with itself than with other Brazilian states. In 1999 the equivalent figure was 12. The state's international trade integration also increased over the period 1991 to 1999. Differences emerge between states. Internal and international border effects are high for Northern regions and low for Southern regions. We explore possible explanations for these findings.