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. (JEL F11, O18, P23, P25, P33, R12, R32)
Coşar, A. Kerem, and Pablo D. Fajgelbaum.
"Internal Geography, International Trade, and Regional Specialization."
American Economic Journal: Microeconomics,
Neoclassical Models of Trade
Economic Development: Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
Socialist Systems and Transitional Economies: Factor and Product Markets; Industry Studies; Population
Socialist Systems and Transitional Economies: Urban, Rural, and Regional Economics
Socialist Institutions and Their Transitions: International Trade, Finance, Investment, Relations, and Aid
Size and Spatial Distributions of Regional Economic Activity
Other Spatial Production and Pricing Analysis