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External integration, structural transformation and economic development: evidence from Argentina

Fajgelbaum, Pablo and Redding, Stephen (2014) External integration, structural transformation and economic development: evidence from Argentina. CEP Discussion Papers (CEPDP1273). Centre for Economic Performance, London School of Economics and Political Science, London, UK.

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Abstract

This paper uses the natural experiment of Argentina’s integration into world markets in the late-nineteenth century to provide evidence on the role of internal geography in shaping the effects of external integration. We develop a quantitative model of the distribution of economic activity across regions and sectors. The model predicts a spatial Balassa-Samuelson effect, in which locations with better access to world markets have higher population densities, higher shares of employment in the non-traded sector, higher relative prices of non-traded goods, and higher land prices relative to wages. We use the model and data on population density and sectoral employment shares to recover sufficient statistics that isolate the economic mechanisms through which external and internal integration affect economic development. Our analysis highlights the role of complementary investments in internal infrastructure and technology adoption in mediating the economy’s response to external integration.

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk/_new/publications/series.asp?...
Additional Information: © 2014 The Authors
Divisions: Centre for Economic Performance
Subjects: F History United States, Canada, Latin America > F1201 Latin America (General)
H Social Sciences > HC Economic History and Conditions
H Social Sciences > HD Industries. Land use. Labor > HD2329 Industrialization
JEL classification: F - International Economics > F1 - Trade > F11 - Neoclassical Models of Trade
F - International Economics > F1 - Trade > F14 - Country and Industry Studies of Trade
O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O13 - Agriculture; Natural Resources; Energy; Environment; Other Primary Products
O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O14 - Industrialization; Manufacturing and Service Industries; Choice of Technology
Sets: Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Date Deposited: 26 Nov 2014 16:38
Last Modified: 20 Apr 2019 23:03
Funders: Economic and Social Research Council
URI: http://eprints.lse.ac.uk/id/eprint/60285

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