Institutions, Technology, and Trade

Abstract

We study the importance of technology and institutions in determining the size of markets in …ve di¤erent countries and …fteen di¤erent German states. The setting of 19th century Europe presents a unique opportunity to address this issue, since it witnessed fundamental change in both dimensions. At the beginning of the century, numerous customs borders, separate currencies with di¤erent monetary systems, and poor transportation facilities were major obstacles that held back trade. Important institutional change, through the Zollverein customs treaties and currency uni…cation, and major technological innovations in the steam train all had a role in increasing market size as measured in terms of the spatial dispersion of grain prices across 68 markets. However, we …nd that the impact of steam trains is substantially larger than the e¤ects from customs liberalizations and currency agreements in increasing market size, where correcting for the potential endogeneity in institutional and technological changes are crucial for this result. We also …nd that a state's institutions in ‡uence the rate of adoption of steam trains, thereby identifying an important indirect e¤ect from institutions on economic performance. The institutional and technological changes account for almost all of the decline in price gaps over this period.

Forest Conservation and Slippage: Evidence from Mexico’s National Payments for Ecosystem Services Program

“…We use road density (length of roads within a buffer of radius 50 km) to proxy for market access. We follow others (e.g., Keller and Shiue 2008;Donaldson 2010;Gollin and Rogerson 2010) in using the connectivity of transportation networks as a proxy for market access. Table 6 shows regressions of deforestation in the buffer zones of 1 km and 5 km around all properties as a function of enrollment in the surrounding 50 km radius and other controls.…”

From Mine to Coast: Transport Infrastructure and the Direction of Trade in Developing Countries

“…For a world sample of bilateral trade (column a) we find the usual determinants of trade: it decreases in distance, but increases in countrypair characteristics that make trade easier, such as a common language, legal origin, a former colonial relationship, and membership of trade agreements. 23 For our main variables of interest, N M d and N , 24 we find that a country imports twice as much from its neighbors than from its non-neighbors (1.068*100%), but this effect is smaller, the larger is the number of mines in the destination country. 25 Figure 7 summarizes this relationship.…”

“…Donaldson (2012) finds that colonial railroads in India had a major impact on trade integration between Indian regions and with the rest of the world, implying a positive welfare effect. Keller and Shiue (2008) find that railways had a stronger market integration effect on 19th century Europe than custom liberalizations and monetary unions. 6 We contribute to this literature by investigating the asymmetric market integration effect of transport infrastructure.…”

Morals and Markets

“…"By the summer of 1945, the ruins had ceased smoking but people were starving and ailing all over Europe": see Judt ( 2005 ). Goethe's wish that "my luggage may pass unopened through all thirty-six German states": see Keller and Shiue ( 2008 ). Taiwan-China "cross-strait commerce was worth $75 billion" in the fi rst six months of 2012: see Wang ( 2012 ).…”