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Abstract

Given that in Brazil there is a significant asymmetry in production and trade among states, this study had as objective to measure the border effect to the intranational and international trade, using it as an indicator of the degree of integration. Such effect measures the bias to the internal trade of a country or state, in comparison to the external trade. A gravity model, including different dummy variables was used as methodology for this study. Results showed that intra-state trade in Brazil was 32 and 96 times larger than interstate and international trade, respectively. Interstate trade, was shown to be around 34 times larger than international trade. The border effect calculated to each state trading to other states, and to the rest of the world, showed smaller values and larger commercial integration among the states of the southeast and south regions of Brazil.

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