Internal Geography, International Trade, and Regional Specialization

A. Kerem Co?ar and Pablo Fajgelbaum ()

American Economic Journal: Microeconomics, 2016, vol. 8, issue 1, 24-56

Abstract: We introduce an internal geography to the canonical model of international trade driven by comparative advantages to study the regional effects of external economic integration. The model features a dual-economy structure, in which locations near international gates specialize in export-oriented sectors while more distant locations do not trade with the rest of the world. The theory rationalizes patterns of specialization, employment, and relative incomes observed in developing countries that opened up to trade. We find regional specialization patterns consistent with the model in industry-level data from Chinese prefectures. (JEL F11, O18, P23, P25, P33, R12, R32)

JEL-codes: F11 O18 P23 P25 P33 R12 R32 (search for similar items in EconPapers)
Date: 2016
Note: DOI: 10.1257/mic.20140145
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Citations: View citations in EconPapers (93)

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Working Paper: Internal Geography, International Trade, and Regional Specialization (2013)
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