Market Potential and Development

Thierry Mayer

No 6798, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper provides evidence on the long-term impact of market potential on economic development. It derives from the New Economic Geography literature a structural estimation where the level of factors' income of a country is related to its export capacity, labelled Market Access (MA) by Redding and Venables (2004), or Real Market Potential (RMP) by Head and Mayer (2004). The empirical part evaluates this market potential for all countries in the world with available trade data over the 1960-2003 period and relates it to income per capita. Overall results show that market potential is a powerful driver of increases in income per capita.

Keywords: Development; Gravity; International trade; Market potential (search for similar items in EconPapers)
JEL-codes: F15 O11 (search for similar items in EconPapers)
Date: 2008-04
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (35)

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Related works:
Working Paper: Market Potential and Development (2009)
Working Paper: Market Potential and Development (2008)
Working Paper: Market Potential and Development (2008)
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