The (Rail)road to Structural Change: Transportation Costs, Integration, and Production Specialization

Sarah Walker

No 124614, 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington from Agricultural and Applied Economics Association

Abstract: The current study explores the role of economic integration in catalyzing structural change. Specifically, it addresses the question of how reductions in transportation costs affect patterns of production specialization over time. Drawing upon the New Economic Geography literature (Krugman, 1991; Krugman & Venables, 1995) and exploiting a natural experiment in the 19th century Austro-Hungarian Empire, I develop a structural model to empirically measure the effect of reduced transportation costs – through the introduction of railroads – on the concentration of manufactures production in a regional economy over time (i.e., 1841-1917). The structural estimations are supplemented by a reduced form strategy that attempts to address the inherent simultaneity bias that the structural estimates are incapable of solving.

Keywords: International Development; International Relations/Trade (search for similar items in EconPapers)
Date: 2012-06
New Economics Papers: this item is included in nep-his and nep-tre
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea12:124614

DOI: 10.22004/ag.econ.124614

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