In international trade theory, countries are often treated as homogenous regions, with no account taken of their internal geography. This column uses evidence from China’s Treaty Port Era to show how domestic trade frictions shape welfare gains from trade. Gains from new technologies that lower trade costs are shared, but the gains are not evenly distributed. Lower trade costs can also mean lower welfare for productivity leaders, who may be replaced by low-cost suppliers from less productive regions as the costs of transport decline.
Wolfgang Keller, Javier Andres Santiago, Carol Shiue, 23 August 2016
Ivan Lopez Cruz, Sebastian Galiani, Gustavo Torrens, 24 May 2016
A large empirical literature has revealed the effects of preventative and punitive measures on crime. This column examines the effects of police deployment strategies, comparing geographically concentrated protection with evenly dispersed protection across a city. The results suggests that when considering changes in the geographic distribution of police forces, we should take into account the effects on house prices and on reallocation of the population, as well as the overall effect on crime in the entire city.
Jeremiah Dittmar, Ralf R Meisenzahl, 26 April 2016
Throughout history, most states have functioned as kleptocracies and not as providers of public goods. This column analyses the diffusion of legal institutions that established Europe’s first large-scale experiments in mass public education. These institutions originated in Germany during the Protestant Reformation due to popular political mobilisation, but only in around half of Protestant cities. Cities that formalised these institutions grew faster over the next 200 years, both by attracting and by producing more highly skilled residents.
Rune Fitjar, Andrés Rodríguez-Pose, 11 April 2016
Geographic proximity between innovating actors has been shown to facilitate knowledge transfers and spillovers. However, the degree to which these effects are driven by serendipitous encounters has yet to be examined. This column explores this issue for a sample of Norwegian firms. Of the relationships that help firms innovate, fewer than 10% are formed in purely casual circumstances. The results imply that knowledge isn’t so much ‘in the air’; transfers usually result from purposeful search.
Rudiger Ahrend, Alexander Lembcke, Abel Schumann, 19 January 2016
A city’s metropolitan governance structure has a critical influence on the quality of life and economic outcomes of its inhabitants. This column quantifies the impact of governance on productivity using data from five OECD countries. Administrative fragmentation, which complicates policy coordination across a city, has a negative effect on individual productivity. This finding, combined with benefits from good governance such as improved transport and lower pollution levels, highlights the importance of well-designed metropolitan authorities.
Ejaz Ghani, Arti Grover Goswami, William Kerr, 18 November 2015
Urbanisation in India is taking many twists and turns. Organised manufacturing is moving out of urban areas, while unorganised manufacturing is transitioning towards urban areas. As the fourth greatest energy consumer in the world, how the country manages this ongoing industrialisation and urbanisation process will have important environmental implications. This column looks at the relationship between growth, geography, and energy efficiency in manufacturing in India. Electricity consumption per unit of output has declined in urban and rural areas, but these overall trends mask substantial variation between states and substantial potential for further efficiency improvements in energy-intensive industries.
James Feyrer, Erin Mansur, Bruce Sacerdote, 16 November 2015
Fracking has driven an oil and natural gas boom in the US over the past decade. This column examines the impact these mining activities have had on local and regional economies. US counties enjoy significant economic benefits, including increased wages and new job creation. These effects grow as the geographic radius is extended to include neighbouring areas in the region. The results suggest that the fracking boom provided some insulation for these areas during the Great Recession, and lowered national unemployment by as much as 0.5%.
Ross Levine, Chen Lin, 02 July 2015
Labour market regulations have important implications for both the incidence of cross-border acquisitions, and the outcomes for acquiring firms. This column explores how variations in labour regulations between countries affect cross-border acquisitions and subsequent firm performance. For a sample of 50 countries, firms are found to enjoy larger returns when they acquire a target in a country with weaker labour regulations than the acquirer’s home country.
Mercedes Delgado, Christian Ketels, Michael Porter, Scott Stern, 18 September 2014
There is a consensus among economists that ‘deep roots’ – geography, natural endowments, and institutions – are important determinants of prosperity differences across countries. This column argues that deep roots matter, but they are neither the whole story nor an excuse for political inaction today. Current policies are important – especially the broad range of policies that shape the business environment and the sophistication of companies – and they are affected but not determined by the past.
Coen Teulings, 11 July 2014
The financial crisis and the Great Recession have led to calls for more economic history in economic education. This column argues for a much broader use of history in economics courses, as a device for teaching both the logic and the empirical relevance of economics. A proposed curriculum would include the rise of agriculture, urbanisation, war, the rule of law, and demography.
Enrico Spolaore, Romain Wacziarg, 03 October 2013
There is now widespread agreement that ‘deep’ history matters for comparative development. Recent research has shown that ancestry – the transmission of genetic and cultural traits across generations – matters more than the history of geographic regions. This column argues that long-term divergences in inherited traits can create barriers to the diffusion of technology. The greater a population’s genetic distance to the population on the technological frontier, the lower its relative income will be. Development policies should aim at reducing barriers to exchange and communication.
Alberto Alesina, Stelios Michalopoulos, Elias Papaioannou, 18 November 2012
This paper explores the consequences and origins of contemporary differences in well-being across ethnic groups within countries. The authors show that ethnic inequality is strongly inversely related to per capita income, and that differences in geographic endowments across ethnic homelands explain a sizable portion of contemporary ethnic inequality. This deeply rooted inequality in geographic attributes across ethnic regions is also negatively related to comparative development.
Diego Comin, Mikhail Dmitriev, Esteban Rossi-Hansberg, 11 November 2012
This paper studies empirically technology diffusion across countries and over time, finding significant evidence that technology diffuses slower to locations that are farther away from adoption leaders. The authors document the significant role that geography plays in determining technology diffusion across countries.
John Bluedorn, Akos Valentinyi, Michael Vlassopoulos, 15 December 2009
Hot countries tend to be poorer. This column uses the cross-century, cross-country variation in climatic temperatures to estimate the effects of historic temperature upon current incomes. The negative relationship between current temperature and income appears due to temperature variations in the 18th and 19th centuries. That suggests that the consequences of climate change may be felt for a very long time.
Nathan Nunn, Diego Puga, 06 June 2007
African nations with ‘bad’ terrain suffered less from the slave trade. More than a century after the slave trade ended, the protective benefits of ruggedness still outweigh its contemporary economic disadvantages when it comes to GDP per capita.