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Trade, Structural Transformation and Development: Evidence from Argentina 1869-1914

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  • Pablo Fajgelbaum
  • Stephen J. Redding

Abstract

We provide new theory and evidence on the role of external and internal integration in structural transformation and economic development using Argentina’s integration into the world economy in the late-19th century. Our theoretical model provides microfoundations for a spatial Balassa-Samuelson effect, in which locations closer to world markets have higher population densities, urban population shares, relative prices of non-traded goods, and land prices relative to wages, and specialize in transport-cost-sensitive traded goods. We estimate the model’s parameters, provide evidence in support of this spatial Balassa-Samuelson mechanism, and find substantial effects of both external and internal integration on economic development.

Suggested Citation

  • Pablo Fajgelbaum & Stephen J. Redding, 2014. "Trade, Structural Transformation and Development: Evidence from Argentina 1869-1914," NBER Working Papers 20217, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:20217
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    Cited by:

    1. L. De Benedictis & V. Licio & AM. Pinna, 2018. "The long-term effects of the historical Roman road network: trade costs of Italian provinces," Working Paper CRENoS 201801, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    2. Atkin, David & Donaldson, Dave, 2015. "Who’s Getting Globalized? The Size and Implications of Intra-national Trade Costs," CEPR Discussion Papers 10759, C.E.P.R. Discussion Papers.
    3. Natalia Ramondo & Andrés Rodríguez-Clare & Milagro Saborío-Rodríguez, 2016. "Trade, Domestic Frictions, and Scale Effects," American Economic Review, American Economic Association, vol. 106(10), pages 3159-3184, October.
    4. Nelson Lind & Natalia Ramondo, 2018. "Trade with Correlation," NBER Working Papers 24380, National Bureau of Economic Research, Inc.
    5. Larch,Mario,Tan,Shawn Weiming,Yotov,Yoto Valentinov, 2021. "A Simple Method to Quantify the ex-ante Effects of “Deep” Trade Liberalization and “Hard” Trade Protection," Policy Research Working Paper Series 9791, The World Bank.
    6. Andres Santiago, Javier & Keller, Wolfgang & Shiue, Carol Hua, 2016. "Foreigners Knocking on the Door: Trade in China During the Treaty Port Era," CEPR Discussion Papers 11040, C.E.P.R. Discussion Papers.
    7. Stephen J. Redding & Esteban Rossi-Hansberg, 2017. "Quantitative Spatial Economics," Annual Review of Economics, Annual Reviews, vol. 9(1), pages 21-58, September.
    8. Gianandrea Lanzara & Matteo Santacesaria, 2021. "Market areas in general equilibrium," Papers 2110.15849, arXiv.org.
    9. Or Levkovich & Jan Rouwendal & Jos van Ommeren, 2020. "The impact of highways on population redistribution: the role of land development restrictions [Roads and innovation]," Journal of Economic Geography, Oxford University Press, vol. 20(3), pages 783-808.
    10. Baum-Snow, Nathaniel & Henderson, J. Vernon & Turner, Matthew A. & Zhang, Qinghua & Brandt, Loren, 2020. "Does investment in national highways help or hurt hinterland city growth?," Journal of Urban Economics, Elsevier, vol. 115(C).
    11. Nelson Lind & Natalia Ramondo, 2018. "Innovation, Knowledge Diffusion, and Globalization," NBER Working Papers 25071, National Bureau of Economic Research, Inc.
    12. Droller, Federico & Fiszbein, Martin, 2021. "Staple Products, Linkages, and Development: Evidence from Argentina," The Journal of Economic History, Cambridge University Press, vol. 81(3), pages 723-762, September.
    13. Bird, Julia & Lebrand, Mathilde & Venables, Anthony J., 2020. "The Belt and Road Initiative: Reshaping economic geography in Central Asia?," Journal of Development Economics, Elsevier, vol. 144(C).
    14. Jaimovich, Esteban, 2019. "Roadways, input sourcing, and patterns of specialization," European Economic Review, Elsevier, vol. 120(C).
    15. Sam Haltenhof, "undated". "Services Trade and Internet Connectivity," Working Papers 668, Research Seminar in International Economics, University of Michigan.
    16. Yuan Zi, 2016. "Trade Liberalization and the Great Labor Reallocation," IHEID Working Papers 18-2016, Economics Section, The Graduate Institute of International Studies.
    17. Klaus Desmet & Dávid Krisztián Nagy & Esteban Rossi-Hansberg, 2015. "The Geography of Development: Evaluating Migration Restrictions and Coastal Flooding," NBER Working Papers 21087, National Bureau of Economic Research, Inc.
    18. Nathaniel Baum-Snow & J. Vernon Henderson & Matthew Turner & Loren Brandt & Qinghua Zhang, 2015. "Transport Infrastructure, Urban Growth and Market Access in China," ERSA conference papers ersa15p1177, European Regional Science Association.
    19. V. Licio, 2019. "When history leaves a mark: a new measure of Roman roads," Working Paper CRENoS 201904, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    20. Song, Tao & Cieslik, Andrzej, 2020. "The effects of free trade agreements on regional wages in China," Economic Systems, Elsevier, vol. 44(3).
    21. Margarita Gafaro & Heitor S. Pellegrina, 2018. "Market access, agricultural productivity and selection into trade: evidence from Colombia," Borradores de Economia 1050, Banco de la Republica de Colombia.
    22. Zi, Yuan, 2020. "Trade Liberalization and the Great Labor Reallocation," CEPR Discussion Papers 14490, C.E.P.R. Discussion Papers.

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    More about this item

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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