Rio Grande do Sul is one of the most important states in terms of exports in Brazil, and is currently the third largest exporter. This paper examines the export bias of the state through the so-called border effect in the period 1997-2002. This effect, defined as the negative impact of national borders on trade volumes, was estimated empirically, using a gravity model with both pooled and panel data with all 27 Brazilian states and 40 countries. The results suggest that borders do not represent an additional cost to the state's international trade. Possible explanations for the absence of the border effect are related to the proximity of Rio Grande do Sul with other countries, especially those from MERCOSUR, to the trade preferences granted by the bloc and to the state's export profile, based on primary products.
Border Effect; Gravity Model; Regional Integration
