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Trade liberalization and structural changes: Prefecture-level evidence from China

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  • Fei, Xuan

Abstract

Notable heterogeneity regarding international trade openness and level of development across different regions with significant inter-provincial migration has been a prominent feature in contemporary China. This paper studies the particular role of international trade in the structural transformation across each region in China. Combining several data, we document that there exhibits a non-monotone, hump-shaped relationship between international trade freeness and prefecture-level manufacture labor share in China. We rationalize this stylized fact in a spatial equilibrium model with multi-region, multi-sector, costly trade and endogenous allocation of labor, capital, and land. The analysis highlights the role of internal geography in shaping patterns of trade-induced structural change.

Suggested Citation

  • Fei, Xuan, 2022. "Trade liberalization and structural changes: Prefecture-level evidence from China," Structural Change and Economic Dynamics, Elsevier, vol. 61(C), pages 103-126.
    • Handle: RePEc:eee:streco:v:61:y:2022:i:c:p:103-126
    DOI: 10.1016/j.strueco.2022.02.001
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    More about this item

    Keywords

    Structural changes; Trade liberalization; China;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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