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Endowments, market potential, and industrial location: evidence from interwar Poland (1918-1939)

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  • Wolf, Nikolaus

Abstract

The paper explores the determinants of industry location across interwar Poland. After more than 120 years of political and economic separation, Poland was reunified at the end of 1918. In consequence, its industry faced massive structural changes: the removal of internal tariff barriers and improved infrastructure strengthened the domestic market, while foreign market relations were cut off. Similarly, the geographical dispersion of factor endowments was changed through internal migration and new institutional arrangements (education system, patent laws, etc.). How did these forces interact to determine the location of industry? Did a new interregional division of labour emerge after unification? We survey the dynamics of industrial location between 1925 and 1937 and estimate a specification that nests market potential and comparative advantage to quantify their respective impact over time. The results point to a role for both, comparative advantage and market potential, but there was a dominating and ever increasing impact of the availability of skilled labour.

Suggested Citation

  • Wolf, Nikolaus, 2004. "Endowments, market potential, and industrial location: evidence from interwar Poland (1918-1939)," LSE Research Online Documents on Economics 19992, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:19992
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    1. Wolf, Nikolaus, 2007. "Endowments vs. market potential: What explains the relocation of industry after the Polish reunification in 1918?," Explorations in Economic History, Elsevier, vol. 44(1), pages 22-42, January.
    2. Julio Martínez-Galarraga & Elisenda Paluzie & Jordi Pons & Daniel A. Tirado-Fabregat, 2008. "Agglomeration and labour productivity in Spain over the long term," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 2(3), pages 195-212, October.
    3. Julio Martínez-Galarraga, 2014. "Market potential estimates in history: a survey of methods and an application to Spain, 1867-1930," Working Papers 0051, European Historical Economics Society (EHES).

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    More about this item

    Keywords

    Industrial Location; Endowments; Market Potential; Interwar Poland;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F10 - International Economics - - Trade - - - General
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • N74 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - Europe: 1913-
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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