Why Isn't the Whole of Spain Industrialized? New Economic Geography and Early Industrialization, 1797–1910

Spain provides an opportunity to study the causes of regional differences in industrial development over the nineteenth century. As transportation costs decreased and barriers to domestic trade were eliminated, Spanish manufacturing became increasingly concentrated in a few regions. This article combines Heckscher-Ohlin and economic-geography frameworks and finds that comparative-advantage and increasing-return effects were economically very significant and practically explained all differences in industrialization levels across regions. The deficits of some regions in terms of industrialization appear to have been largely attributable to their factor endowments and the absence of home-market effects for modern industries.