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. We provide evidence that the geography of access to markets and sources of supply is statistically significant and quantitatively important in explaining cross-country variation in per capita income. This finding is robust to controlling for a wide range of considerations, including other economic, geographical, social, and institutional characteristics. Geography is found to matter through the mechanisms emphasized by the theory, and the estimated coefficients are consistent with plausible values for the model's structural parameters.

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1 January 2004

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Journal of International Economics 62(1) , pp.53-82, 2004

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DOI: 10.1016/j.jinteco.2003.07.001

https://www.sciencedirect.com/science/article/pii/S0022199603000965

This Journal article is published under the centre's Urban programme, Trade programme.

This publication comes under the following theme: Trade Policy and barriers to international economic integration