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

Xuan Fei

Structural Change and Economic Dynamics, 2022, vol. 61, issue C, 103-126

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.

Keywords: Structural changes; Trade liberalization; China (search for similar items in EconPapers)
JEL-codes: F11 F14 O13 O14 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:streco:v:61:y:2022:i:c:p:103-126

DOI: 10.1016/j.strueco.2022.02.001

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