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Market Integration and Economic Development: A Long-Run Comparison

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  • Keller, Wolfgang
  • Shiue, Carol Hua

Abstract

How much of China’s recent economic performance can be attributed to market-oriented reforms introduced in the last two decades? A long-run perspective may be important for understanding the process of economic development occurring today. This Paper compares the integration of rice markets in China today and 270 years ago. In the 18th century, transport technology was non-mechanized, but markets were close to being free markets. We distinguish local harvest and weather from aggregate sources of price variation in a historical sample and in a similarly constructed contemporary sample. Findings indicate the degree of market integration in the 1720s is a very good predictor of per capita income in the 1990s. Moreover, the current pattern of interregional income in China is strongly linked to persistent geographic factors that were already apparent several centuries ago, well before the enactment of modern reform programmes.

Suggested Citation

  • Keller, Wolfgang & Shiue, Carol Hua, 2004. "Market Integration and Economic Development: A Long-Run Comparison," CEPR Discussion Papers 4310, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:4310
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    References listed on IDEAS

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    Cited by:

    1. Chao Li & John Gibson, 2013. "Spatial Price Differences and Inequality in China: Housing Market Evidence," Working Papers in Economics 13/06, University of Waikato.
    2. Wolfgang Keller & Ben Li & Carol H. Shiue, 2011. "China’s Foreign Trade: Perspectives From the Past 150 Years," The World Economy, Wiley Blackwell, vol. 34(6), pages 853-892, June.
    3. Chao Li & John Gibson, 2014. "Spatial Price Differences and Inequality in the People's Republic of China: Housing Market Evidence," Asian Development Review, MIT Press, vol. 31(1), pages 92-120, March.
    4. Liu, Bo & Keyzer, Michiel & van den Boom, Bart & Zikhali, Precious, 2012. "How connected are Chinese farmers to retail markets? New evidence of price transmission," China Economic Review, Elsevier, vol. 23(1), pages 34-46.
    5. Jeffrey S. Zax & Yin He, 2016. "The Law Of One Price In Chinese Factor Markets," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 61(04), pages 1-31, September.
    6. Robinson, Amanda Lea, 2016. "Internal Borders: Ethnic-Based Market Segmentation in Malawi," World Development, Elsevier, vol. 87(C), pages 371-384.
    7. Qinghua Zhang & Heng-fu Zou, 2012. "Regional Inequality in Contemporary China," Annals of Economics and Finance, Society for AEF, vol. 13(1), pages 113-137, May.
    8. Fan Duan & Bulent Unel, 2017. "Persistence of Cities: Evidence from China," Departmental Working Papers 2017-08, Department of Economics, Louisiana State University.
    9. Masaki Nakabayashi, 2014. "Special Issue: Issues in Asia. Guest Editor: Laixun Zhao," Review of Development Economics, Wiley Blackwell, vol. 18(2), pages 254-271, May.
    10. Haiwen Zhou, 2009. "Population Growth And Industrialization," Economic Inquiry, Western Economic Association International, vol. 47(2), pages 249-265, April.
    11. Hongjun Zhao, 2016. "American Silver Inflow and the Price Revolution in Qing China," Review of Development Economics, Wiley Blackwell, vol. 20(1), pages 294-305, February.

    More about this item

    Keywords

    china; convergence; distance; divergence; economic reforms; geography; growth; risk-sharing; trade;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • N70 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - General, International, or Comparative
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • P30 - Economic Systems - - Socialist Institutions and Their Transitions - - - General

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