External integration, structural transformation and economic development: evidence from Argentina

Pablo Fajgelbaum () and Stephen Redding

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper uses the natural experiment of Argentina’s integration into world markets in the late-nineteenth century to provide evidence on the role of internal geography in shaping the effects of external integration. We develop a quantitative model of the distribution of economic activity across regions and sectors. The model predicts a spatial Balassa-Samuelson effect, in which locations with better access to world markets have higher population densities, higher shares of employment in the non-traded sector, higher relative prices of non-traded goods, and higher land prices relative to wages. We use the model and data on population density and sectoral employment shares to recover sufficient statistics that isolate the economic mechanisms through which external and internal integration affect economic development. Our analysis highlights the role of complementary investments in internal infrastructure and technology adoption in mediating the economy’s response to external integration.

Keywords: External integration; economic development; structural transformation (search for similar items in EconPapers)
JEL-codes: F11 F14 O13 O14 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2014-06
New Economics Papers: this item is included in nep-his
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (55)

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http://eprints.lse.ac.uk/60285/ Open access version. (application/pdf)

Related works:
Working Paper: External Integration, Structural Transformation and Economic Development: Evidence From Argentina (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:60285

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