American Economic Review: Vol. 92 No. 5 (December 2002)
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Transport Costs and the Geography of Arbitrage in Eighteenth-Century China
Shiue, Carol H. 2002. "Transport Costs and the Geography of Arbitrage in Eighteenth-Century China ." American Economic Review, 92(5): 1406-1419.
Trade has been considered a condition for growth and development, a view that might have merits in explaining the rise of the Western world. I use a new data set from archival sources of eighteenth-century China to revisit this question. This analysis suggests previous studies of market integration, which attribute much growth to a reduction in transport costs, have overestimated these effects. I find the overall level of market integration in China was higher than previously thought, and, intertemporal effects are important substitutes for trade. Both factors reduce the importance of trade as a unique explanation for subsequent growth.
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Shiue, Carol H.