Trade, Structural Transformation, and Development: Evidence from Argentina 1869–1914

Pablo Fajgelbaum, Stephen J. Redding

Research output: Contribution to journalArticlepeer-review

Abstract

We provide new theory and evidence on the role of external and internal integration in structural transformation and economic development, using Argentina’s integration into the world economy in the late nineteenth century. Our theoretical model provides microfoundations for a spatial Balassa-Samuelson effect, in which locations closer to world markets have higher population densities, urban population shares, relative prices of nontraded goods, and land prices relative to wages, as well as specializing in traded goods that are transport-cost sensitive. We estimate the model’s parameters, provide evidence in support of this spatial Balassa-Samuelson mechanism, and find substantial effects of both external and internal integration on economic development.

Original languageEnglish (US)
Pages (from-to)1249-1318
Number of pages70
JournalJournal of Political Economy
Volume130
Issue number5
DOIs
StatePublished - May 2022
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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