Asia's Geographic Development

Klaus Desmet, David Nagy () and Esteban Rossi-Hansberg

Asian Development Review, 2017, vol. 34, issue 2, 1-24

Abstract: This paper studies the impact of spatial frictions on Asia's long-term spatial development. Using the framework provided in Desmet, Nagy, and Rossi-Hansberg (2016), we analyze the evolution of Asia's economy and the relative performance of specific regions and countries. We then perform a number of counterfactual experiments and find that a worldwide drop in transport costs of 40% increases the present discounted value of real income by 70.7% globally and 78% in Asia. These figures are much larger than those found in standard quantitative trade models because they include dynamic effects and take into account intracountry transport costs. We also perform exercises in which we upgrade Asia's road network or relax migratory restrictions between locations in Asia. These exercises emphasize the important role of spatial frictions in the development of Asia's economy.

Keywords: economic geography; economy of Asia; growth and development; international migration; quantitative trade models (search for similar items in EconPapers)
JEL-codes: F11 F22 F43 O10 O40 O53 R42 (search for similar items in EconPapers)
Date: 2017
References: View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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