Navigating the Geography of Regional Disparities: Market Access and the Core-Periphery Divide

Gabrielle Gambuli ()
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Gabrielle Gambuli: Université de Cergy-Pontoise, THEMA

No 2023-05, THEMA Working Papers from THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise

Abstract: This paper investigates the impact of market proximity on subnational development worldwide, considering the heterogeneous effects on core and peripheral regions, as well as on countries with different income levels. A gravity-based market potential index is revised to accurately assess distances for land and maritime trips to better capture geographic limitations. Estimations are performed in cross-section with country-fixed effects, by addressing endogeneity issues with instrumental variables. Robustness checks are also conducted with panel data on a smaller sample. The findings reveal that regions with better access to markets and port experience higher regional income per capita, with the effect being higher for wealthier regions. Peripheral regions consistently exhibit a 2 percentage point lower elasticity to market potential compared to core regions. The paper also highlights the potential negative impact of proximity to foreign markets on peripheral regions, especially if they are central to foreign core markets without free trade agreement in place between the respective countries. Results suggest that policies which aim at improving the connectivity of peripheral regions to core domestic markets and develop trade agreements could help mitigate the adverse effects of trade barriers and reduce regional disparities within countries.

Keywords: Market Potential; Economic Geography; Regional Development; Core-Periphery. (search for similar items in EconPapers)
JEL-codes: F15 O18 R11 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-geo, nep-int and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ema:worpap:2023-05

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