EconStor >
ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10419/64837
  
Title:Geography, non-homotheticity, and industrialization: A quantitative analysis PDF Logo
Authors:Breinlich, Holger
Cuñat, Alejandro
Issue Date:2012
Series/Report no.:CESifo Working Paper: Trade Policy 3927
Abstract:We propose a quantitative framework for the analysis of industrialization in which specialization in manufacturing or agriculture is driven by comparative advantage and non-homothetic preferences. Countries are integrated through trade but trade is not costless and geographic position matters. We use a number of analytical examples and a multi-country calibration to explain two important empirical regularities: (i) there is a strong positive cor-relation between proximity to large markets and levels of manufacturing activity; (ii) there is a positive correlation between the ratio of agricultural to manufacturing productivity and shares of manufacturing in GDP. Our calibrated model replicates these facts and also provides a better fit to cross-sectional data on manufacturing shares than frameworks which ignore the role of trade costs or non-homotheticity. We use the calibrated model to quantitatively ana-lyze the effect of increases in agricultural productivity and a further lowering of trade barriers.
Subjects:industrialization
economic geography
international trade
JEL:F11
F12
F14
O14
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

Files in This Item:
File Description SizeFormat
726453803.pdf445.21 kBAdobe PDF
No. of Downloads: Counter Stats
Download bibliographical data as: BibTeX
Share on:http://hdl.handle.net/10419/64837

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.