Trade, Structural Transformation and Development: Evidence from Argentina 1869-1914
52 Pages Posted: 16 Jun 2014 Last revised: 25 Sep 2021
Date Written: June 2014
We provide new theory and evidence on the role of external and internal integration in structural transformation and economic development using Argentina’s integration into the world economy in the late-19th century. Our theoretical model provides microfoundations for a spatial Balassa-Samuelson effect, in which locations closer to world markets have higher population densities, urban population shares, relative prices of non-traded goods, and land prices relative to wages, and specialize in transport-cost-sensitive traded goods. We estimate the model’s parameters, provide evidence in support of this spatial Balassa-Samuelson mechanism, and find substantial effects of both external and internal integration on economic development.
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