Working Paper: CEPR ID: DP2568
Authors: Stephen Redding; Anthony J. Venables
Abstract: This paper estimates a structural model of economic geography using cross-country data on per capita income, bilateral trade, and the relative price of manufacturing goods. More than 70% of the variation in per capita income can be explained by the geography of access to markets and to sources of supply of intermediate inputs. These results are robust to the inclusion of other geographical, social, and institutional characteristics. The estimated coefficients are consistent with plausible values for the structural parameters of the model. We find quantitatively important effects of distance, access to the coast, and openness on levels of per capita income.
Keywords: economic development; economic geography; international trade
JEL Codes: F12; F14; O10
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| distance from markets (R32) | per capita income (D31) |
| distance from suppliers (L81) | per capita income (D31) |
| proximity to markets (R32) | per capita income (D31) |
| halving distance from trade partners (F12) | per capita income (D31) |
| supplier access (L81) | prices of machinery and equipment (L64) |
| market access (L17) | wages (J31) |
| supplier access (L81) | wages (J31) |