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Foreigners Knocking on the Door: Trade in China During the Treaty Port Era

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  • Keller, Wolfgang
  • Shiue, Carol
  • Andres Santiago, Javier

Abstract

Uneven development within countries suggests that domestic trade frictions are important. Trade flows within a country, however, are rarely observed. We employ a new dataset on trade between fifteen Chinese treaty ports to examine the importance of domestic frictions around the year 1900. The distribution of welfare effects depends on each port's productivity and factor costs, China's economic geography as it influences trade costs, as well as the degree of regional diversity in production, which increases the potential gains from trade. We utilize this framework to quantify the size and distribution of welfare effects resulting from new technology and lower trade costs. Domestic trade frictions turn out to be substantial, far from the frictionless world that is commonly assumed. Moreover, geographic barriers loom large in shaping the welfare gains from technology improvements and trade cost reductions. We find, however, that an important explanation for why there was a limit to what could be gained through increased domestic trade was that the differences in productivity across regions ofChina in the 19th century were relatively low.

Suggested Citation

  • Keller, Wolfgang & Shiue, Carol & Andres Santiago, Javier, 2016. "Foreigners Knocking on the Door: Trade in China During the Treaty Port Era," CEPR Discussion Papers 11040, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:11040
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    More about this item

    Keywords

    19th century china; Domestic trade; Economic integration; Welfare gains;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • N15 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Asia including Middle East
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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