Location: 368A Heady Hall
Description: David Weil (Brown University)
"The Global Spatial Distribution of Economic Activity: Nature, History, and the Role of Trade"
Abstract: We study the global distribution of economic activity, as proxied by lights at night, across 240,000 grid cells, and document three facts. First, nearly half of the variation can be explained by a parsimonious set of 24 physical geography attributes. A full set of country indicators only explains a further 11%. Second, when we divide geographic characteristics into two groups, those primarily important for agriculture and those primarily important for trade, we find that the agriculture variables have relatively more explanatory power in countries that developed early and the trade variables have relatively more in countries that developed late, even though the latter group are far more dependent on agriculture today. We show that this apparent puzzle can be explained by agglomeration and the persistence of urban location, in a context where two key technological shocks, increasing agricultural productivity and decreasing transportation costs, occurred with different timing in the two sets of countries. In countries that developed early, structural transformation due to rising agricultural productivity began when transport costs were still relatively high, so cities were localized in agricultural regions. When transport costs fell, these agglomerations persisted. In late-developing countries, transport costs fell before structural transformation. To exploit urban scale economies, manufacturing agglomerated in relatively few, often coastal, locations. Third, consistent with this explanation, countries that developed earlier are more spatially equal in their distribution of education and economic activity than late developers.
Contact Person: Juan Carlos Cordoba