Temporary trade shocks, spatial reallocation, and persistence in developing countries : evidence from a natural experiment in West Africa / M. Shahe Emran, Forhad Shilpi, Harold Coulombe, Brian Blankespoor

By: Contributor(s): Resource type: Ressourcentyp: Buch (Online)Book (Online)Language: English Series: World Bank E-Library Archive | Policy research working paper ; 8962Publisher: Washington, DC, USA : World Bank Group, Development Economics, Development Research Group, August 2019Description: 1 Online-Ressource (circa 52 Seiten) : IllustrationenSubject(s): Genre/Form: Additional physical formats: Erscheint auch als: Temporary Trade Shocks, Spatial Reallocation, and Persistence in Developing Countries: Evidence from a Natural Experiment in West Africa. Druck-Ausgabe Washington, D.C : The World Bank, 2019DOI: DOI: 10.1596/1813-9450-8962Online resources: Summary: In response to rising inequality following decades of trade liberalization, many countries are adopting trade restrictions. Can temporary trade restrictions have long-lasting effects on the spatial distribution of employment and resource allocation? To analyze this, this paper exploits the civil war in Cote d'Ivoire (2002-07), which disrupted access to the world market for two neighboring landlocked countries: Mali and Burkina Faso. The Ivorian war forced rerouting of trade from the Abidjan route to non-Abidjan routes. This paper builds a general equilibrium model where a subsistence-based autarkic hinterland coexists with an integrated segment, and there are two alternative routes to international markets. A trade shock to one route affects resource allocation in both routes by shifting the spatial margins of market integration and sectoral specialization. The effects are heterogeneous, depending on the pre-war market access of a location. The empirical analysis takes advantage of panel data and estimates the effects on structural change in employment on the non-Abidjan route using a triple difference design with location fixed effects. The areas that remain in autarkic equilibrium before and after the trade shock provide plausible estimates of the changes arising from long-term factors unrelated to the trade shock. The estimates show that the temporary trade shock created divergence between the Abidjan and non-Abidjan routes, with accelerated structural change in favor of manufacturing and services employment in the non-Abidjan route. This paper finds evidence of persistence in the effects through higher sunk investment in built-up density, agglomeration through concentration of skilled labor and greater public investment in complementary inputs such as electricity infrastructure (measured by nightlights density)PPN: PPN: 168005970XPackage identifier: Produktsigel: ZDB-110-WBL | ZDB-1-WBA | ZDB-110-WBO
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