Publication Type
Working Paper
Version
publishedVersion
Publication Date
2-2024
Abstract
We explore how the spatial impacts of trade evolve over time using a dynamic spatial model that incorporates capital accumulation and skill acquisition. We show that in the short run, the spatial impacts of trade mainly depend on the initial conditions, especially the endowments of physical and human capital across locations. However, in the long run, trade shocks shape the distribution of production factors across space through factor accumulation and migration, resulting in significantly different spatial impacts. In the context of China’s WTO accession, we find that international trade is seven times more effective in driving the population towards coastal areas in the long run than in the short run. The skill composition of trade-induced migration exhibits a reversal over time. Furthermore, we demonstrate that policies designed to alleviate the localized impacts of globalization would be misdirected and underfunded if policymakers overlook the intertemporal variations in the spatial impacts of trade.
Keywords
International trade, skill premium, economic geography, capital accumulation
Discipline
International Economics | International Trade Law
Research Areas
International Economics
First Page
1
Last Page
58
Publisher
SMU Economics and Statistics Working Paper Series, Paper No. 03-2024
City or Country
Singapore
Citation
MA, Lin; SONG, Yunlong; and TANG, Yang.
The long and short-run spatial impacts of trade. (2024). 1-58.
Available at: https://ink.library.smu.edu.sg/soe_research/2734
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.