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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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    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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