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The Geographic Concentration of Enterprise in Developing Countries

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  • John S. Felkner
  • Robert M. Townsend

Abstract

A nation's economic geography can have an enormous impact on its development. In Thailand, we show that a high concentration of enterprise in an area predicts high subsequent growth in and around that area. We also find spatially contiguous convergence of enterprise with stagnant areas left behind. Exogenous physiographic conditions are correlated with enterprise location and growth. We fit a structural, micro-founded model of occupation transitions with fine-tuned geographic capabilities to village data and replicate these salient facts. Key elements of the model include costs, credit constraints on occupation choice, and spatially varying expansion of financial service providers. Copyright 2011, Oxford University Press.

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File URL: http://hdl.handle.net/10.1093/qje/qjr046
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Bibliographic Info

Article provided by Oxford University Press in its journal The Quarterly Journal of Economics.

Volume (Year): 126 (2011)
Issue (Month): 4 ()
Pages: 2005-2061

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Handle: RePEc:oup:qjecon:v:126:y:2011:i:4:p:2005-2061

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Cited by:
  1. Holger Breinlich & Gianmarco I. P. Ottaviano & Jonathan R. W. Temple, 2013. "Regional Growth and Regional Decline," CEP Discussion Papers dp1232, Centre for Economic Performance, LSE.
  2. Howard, Emma & Newman, Carol & Tarp, Finn, 2012. "Measuring Industry Agglomeration and Identifying the Driving Forces," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  3. Joseph P. Kaboski & Robert M. Townsend, 2012. "The Impact of Credit on Village Economies," American Economic Journal: Applied Economics, American Economic Association, vol. 4(2), pages 98-133, April.

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