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Trade and Urbanisation
Author(s) -
Thia Jang P.
Publication year - 2016
Publication title -
the world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/twec.12312
Subject(s) - urbanization , economics , economies of agglomeration , incentive , economic geography , instrumental variable , international economics , international trade , economic growth , econometrics , market economy
Insights from economics of geography suggest that greater urbanisation should lead to an increased level of trade. Larger exporting markets should also provide incentives for agglomeration. Using a novel instrumental variables approach, this study provides empirical evidence that suggests that within country urbanisation has a strong positive impact on exports of the modern sector, while exports too have a positive impact on urbanisation. Consistent with model predictions, urbanisation is also associated with a decline in exports and increase in imports in the primary sector.