Internal geography, international trade, and regional specialization

A. Kerem Coşar, Pablo D. Fajgelbaum

Research output: Contribution to journalArticle

33 Scopus citations

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.

Original languageEnglish (US)
Pages (from-to)24-56
Number of pages33
JournalAmerican Economic Journal: Microeconomics
Volume8
Issue number1
DOIs
StatePublished - 2016
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Economics, Econometrics and Finance(all)

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