Trade and Geography
Paper Session
Sunday, Jan. 3, 2021 3:45 PM - 5:45 PM (EST)
- Chair: Sebastian Sotelo, University of Michigan-Ann Arbor
Service-Led or Service-Biased Growth? Equilibrium Development Accounting Across Indian Districts.
Abstract
In many developing countries, employment declines in the agricultural sector, increases in the service sector, and there is limited industrialization. Is the service sector an engine of growth or is its expansion a mere consequence of productivity growth in goods-producing industries? What are the welfare and distributional effects of different paths of economic growth? To address these questions, we construct and estimate a spatial equilibrium model with nonhomothetic preferences. The estimated model lends itself to a quantitative assessment of the heterogeneous welfare effects of di fferent sources of economic growth. We apply our methodology to India. We find that productivity growth in consumer services is an important driver of structural transformation and for improving living standards, although the growth is highly skewed toward high-income households living in urban districts.Migration, Specialization and Trade: Evidence from the Brazilian March to the West
Abstract
Exploiting a large migration of farmers to the West of Brazil between 1950 and 2010, we study how internal migration shapes aggregate and regional comparative advantage. We document that farmers emigrating from regions with high employment in a given crop are more likely to grow that crop and have higher earnings than other farmers doing so. We incorporate this heterogeneity into a quantitative model of trade and migration. By reshaping Ricardian and Heckscher-Ohlin comparative advantage, the migration cost decline we observe contributed substantially to Brazil's rise as a leading commodity exporter. A large part of this eect comes from the reallocation of knowledge carried by migrants.Cities, Productivity, and Trade
Abstract
We document a novel stylized fact: Using data for several countries, we show that export activity is disproportionately concentrated in larger cities – even more so than overall economic activity. We account for this fact by marrying elements of international trade and economic geography. We build a model with agglomeration economies where firms with heterogeneous productivity sort across city sizes and select into exporting. The model allows us to study the geographic implications of trade policy, as well as the international trade effects of urban policies. We show that (i) lifting restrictions on housing supply raises not only the aggregate productivity of the economy but also its aggregate export intensity, by allowing more firms to locate in larger cities and profit from agglomeration effects; (ii) conversely, while opening up to trade has complex overall economic geography implications, within sectors, it tends to shift employment towards larger cities. We structurally estimate the model using data for the universe of Chinese manufacturing firms and study the general equilibrium effects of trade liberalization and of urban policies. We find that the effects of these policies are quantitatively different from those predicted by trade models that ignore economic geography, and by economic geography models that omit international trade (both of which are nested in our framework).Discussant(s)
Elisa Giannone
,
Pennsylvania State University
Sebastian Sotelo
,
University of Michigan-Ann Arbor
Ferdinando Monte
,
Georgetown University
Fabian Eckert
,
Princeton University
JEL Classifications
- F1 - Trade