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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.

Suggested Citation

  • John S. Felkner & Robert M. Townsend, 2011. "The Geographic Concentration of Enterprise in Developing Countries," The Quarterly Journal of Economics, Oxford University Press, vol. 126(4), pages 2005-2061.
  • Handle: RePEc:oup:qjecon:v:126:y:2011:i:4:p:2005-2061
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    File URL: http://hdl.handle.net/10.1093/qje/qjr046
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    1. repec:eee:deveco:v:130:y:2018:i:c:p:173-189 is not listed on IDEAS
    2. repec:unu:wpaper:wp2012-084 is not listed on IDEAS
    3. Breinlich, Holger & Ottaviano, Gianmarco I.P. & Temple, Jonathan R.W., 2014. "Regional Growth and Regional Decline," Handbook of Economic Growth,in: Handbook of Economic Growth, edition 1, volume 2, chapter 4, pages 683-779 Elsevier.
    4. Gibbons, Steve & Overman, Henry G. & Patacchini, Eleonora, 2015. "Spatial Methods," Handbook of Regional and Urban Economics, Elsevier.
    5. Cazzuffi, Chiara & Pereira-López, Mariana & Soloaga, Isidro, 2017. "Local poverty reduction in Chile and Mexico: The role of food manufacturing growth," Food Policy, Elsevier, vol. 68(C), pages 160-185.
    6. Brodeur, Abel & Lekfuangfu, Warn N. & Zylberberg, Yanos, 2017. "War, migration and the origins of the Thai sex industry," LSE Research Online Documents on Economics 86581, London School of Economics and Political Science, LSE Library.
    7. repec:kap:sbusec:v:50:y:2018:i:1:d:10.1007_s11187-017-9886-2 is not listed on IDEAS
    8. Jedwab, Remi & Vollrath, Dietrich, 2015. "Urbanization without growth in historical perspective," Explorations in Economic History, Elsevier, vol. 58(C), pages 1-21.
    9. repec:esx:essedp:729 is not listed on IDEAS
    10. Emma Howard & Carol Newman & Finn Tarp, 2016. "Measuring industry coagglomeration and identifying the driving forces," Journal of Economic Geography, Oxford University Press, vol. 16(5), pages 1055-1078.
    11. 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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