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Transport Costs and the Geography of Arbitrage in Eighteenth-Century China

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  • Carol H. Shiue

Abstract

Trade has been considered a condition for growth and development, a view that might have merits in explaining the rise of the Western world. I use a new data set from archival sources of eighteenth-century China to revisit this question. This analysis suggests previous studies of market integration, which attribute much growth to a reduction in transport costs, have overestimated these effects. I find the overall level of market integration in China was higher than previously thought, and, intertemporal effects are important substitutes for trade. Both factors reduce the importance of trade as a unique explanation for subsequent growth.

Suggested Citation

  • Carol H. Shiue, 2002. "Transport Costs and the Geography of Arbitrage in Eighteenth-Century China," American Economic Review, American Economic Association, vol. 92(5), pages 1406-1419, December.
  • Handle: RePEc:aea:aecrev:v:92:y:2002:i:5:p:1406-1419 Note: DOI: 10.1257/000282802762024566
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    References listed on IDEAS

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    1. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
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    3. Gallup, John L. & Sachs, Jeffrey D. & Mellinger, Andrew, "undated". "Geography and Economic Development," Instructional Stata datasets for econometrics geodata, Boston College Department of Economics.
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    Cited by:

    1. Jacks, David S. & Yan, Se & Zhao, Liuyan, 2017. "Silver points, silver flows, and the measure of Chinese financial integration," Journal of International Economics, Elsevier, pages 377-386.
    2. Shiue, Carol Hua, 2013. "Human Capital and Fertility in Chinese Clans Before Modern Growth," CEPR Discussion Papers 9746, C.E.P.R. Discussion Papers.
    3. Haiwen Zhou, 2012. "Internal Rebellions and External Threats: A Model of Government Organizational Forms in Ancient China," Southern Economic Journal, Southern Economic Association, vol. 78(4), pages 1120-1141, April.
    4. Burgess, Robin & Donaldson, Dave, 2012. "Can openness to trade reduce income volatility? Evidence from colonial India's famine era," LSE Research Online Documents on Economics 54255, London School of Economics and Political Science, LSE Library.
    5. Qiang Chen, 2015. "Climate shocks, dynastic cycles and nomadic conquests: evidence from historical China," Oxford Economic Papers, Oxford University Press, vol. 67(2), pages 185-204.
    6. Wolfgang Keller & Carol H. Shiue, 2007. "Market Integration and Economic Development: A Long-run Comparison," Review of Development Economics, Wiley Blackwell, vol. 11(1), pages 107-123, February.
    7. Keller, Wolfgang & Shiue, Carol H., 2007. "The origin of spatial interaction," Journal of Econometrics, Elsevier, vol. 140(1), pages 304-332, September.
    8. Keller, Wolfgang & Shiue, Carol H, 2016. "Market Integration as a Mechanism of Growth," CEPR Discussion Papers 11627, C.E.P.R. Discussion Papers.
    9. Haiwen Zhou, 2009. "Population Growth And Industrialization," Economic Inquiry, Western Economic Association International, vol. 47(2), pages 249-265, April.
    10. Daniel Bernhofen & Markus Eberhardt & Jianan Li & Stephen Morgan, 2017. "The evolution of markets in China and Western Europe on the eve of industrialisation," Discussion Papers 2017-12, University of Nottingham, GEP.
    11. Martin Uebele & Tim Grünebaum & Michael Kopsidis, 2013. "King's law and food storage in Saxony, c. 1790-1830," CQE Working Papers 2613, Center for Quantitative Economics (CQE), University of Muenster.
    12. Meng, Xin & Qian, Nancy & Yared, Pierre, 2010. "The Institutional Causes of China's Great Famine, 1959-61," CEPR Discussion Papers 8012, C.E.P.R. Discussion Papers.
    13. repec:kap:jecgro:v:22:y:2017:i:4:d:10.1007_s10887-017-9148-9 is not listed on IDEAS
    14. Daniel Bernhofen & Markus Eberhardt & Jianan Li & Stephen Morgan, 2015. "Assessing Market (Dis)Integration in Early Modern China and Europe," Discussion Papers 2015-12, University of Nottingham, GEP.
    15. Wolfgang Keller & Carol H. Shiue, 2013. "The Link Between Fundamentals and Proximate Factors in Development," NBER Working Papers 18808, National Bureau of Economic Research, Inc.
    16. Carol H. Shiue & Wolfgang Keller, 2007. "Markets in China and Europe on the Eve of the Industrial Revolution," American Economic Review, American Economic Association, pages 1189-1216.
    17. Fu, Qiang & Lu, Jingfeng & Wang, Zhewei, 2014. "“Reverse” nested lottery contests," Journal of Mathematical Economics, Elsevier, pages 128-140.
    18. Lence, Sergio & Moschini, Giancarlo & Santeramo, Fabio Gaetano, 2017. "Threshold cointegration and spatial price transmission when expectations matter," MPRA Paper 80202, University Library of Munich, Germany.
    19. Donaldson, Dave, 2010. "Railroads of the Raj: estimating the impact of transportation infrastructure," LSE Research Online Documents on Economics 38368, London School of Economics and Political Science, LSE Library.
    20. Chenhang Zeng, 2013. "Optimal Advance Selling Strategy under Price Commitment," Pacific Economic Review, Wiley Blackwell, pages 233-258.
    21. Li, Zhigang & Chen, Yu, 2013. "Estimating the social return to transport infrastructure: A price-difference approach applied to a quasi-experiment," Journal of Comparative Economics, Elsevier, pages 669-683.
    22. Zhou, Haiwen, 2013. "A Model of Institutional Complementarities in Ancient China," MPRA Paper 74697, University Library of Munich, Germany, revised Oct 2016.
    23. Ran Abramitzky, 2015. "Economics and the Modern Economic Historian," NBER Working Papers 21636, National Bureau of Economic Research, Inc.
    24. Keller, Wolfgang & Andres Santiago, Javier & Shiue, Carol H., 2017. "China's domestic trade during the Treaty-Port Era," Explorations in Economic History, Elsevier, vol. 63(C), pages 26-43.
    25. Qiang Chen, 2015. "Climate Shocks, State Capacity and Peasant Uprisings in North China during 25–1911 ce," Economica, London School of Economics and Political Science, vol. 82(326), pages 295-318, April.

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