Market Potential and Global Growth over the Long Twentieth Century

• 成果类型: Article
• 署名作者: Jacks, David S.; Novy, Dennis
• 署名单位: Simon Fraser University; National Bureau of Economic Research; University of Warwick; Centre for Economic Policy Research - UK; University of London; London School Economics & Political Science
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2018.07.003
• 发表日期: 2018
• 页码: 221-237
• 关键词: Economic geography; Market potential; Structural Gravity; Trade costs

摘要

We examine the evolution of market potential and its role in driving economic growth over the long twentieth century. Theoretically, we exploit a structural gravity model to derive a closed-form solution for a widely-used measure of market potential. We are thus able to express market potential as a function of directly observable and easily estimated variables. Empirically, we collect a large dataset on aggregate and bilateral trade flows as well as output for 51 countries. We find that market potential exhibits an upward trend across all regions of the world from the early 1930s and that this trend significantly deviates from the evolution of world GDP. Finally, using exogenous variation in trade-related distances to world markets, we demonstrate a significant causal role of market potential in driving global income growth over this period. (C) 2018 Elsevier B.V. All rights reserved.