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  3. American Economic Journal: Microeconomics
  4. February 2016
  5. Internal Geography, International Trade, and Regional Specialization

Internal Geography, International Trade, and Regional Specialization

  • A. Kerem Coşar
  • Pablo D. Fajgelbaum
American Economic Journal: Microeconomics
vol. 8, no. 1, February 2016
(pp. 24-56)
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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. (JEL F11, O18, P23, P25, P33, R12, R32)

Citation

Coşar, A. Kerem, and Pablo D. Fajgelbaum. 2016. "Internal Geography, International Trade, and Regional Specialization." American Economic Journal: Microeconomics, 8 (1): 24-56. DOI: 10.1257/mic.20140145

Additional Materials

JEL Classification

  • F11 Neoclassical Models of Trade
  • O18 Economic Development: Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
  • P23 Socialist Systems and Transitional Economies: Factor and Product Markets; Industry Studies; Population
  • P25 Socialist Systems and Transitional Economies: Urban, Rural, and Regional Economics
  • P33 Socialist Institutions and Their Transitions: International Trade, Finance, Investment, Relations, and Aid
  • R12 Size and Spatial Distributions of Regional Economic Activity
  • R32 Other Spatial Production and Pricing Analysis
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