Should-Read: J. Vernon Henderson, Adam Storeygard, Tim L. Squires, and David N. Weil: The Global Spatial Distribution of Economic Activity: Nature, History, and the Role of Trade

Should-Read: A very nice paper indeed: J. Vernon Henderson, Adam Storeygard, Tim L. Squires, and David N. Weil: The Global Spatial Distribution of Economic Activity: Nature, History, and the Role of Trade: “We study the distribution of economic activity, as proxied by lights at night, across 250,000 grid cells of average area 560 square kilometers…

…Nearly half of the variation can be explained by a parsimonious set of physical geography attributes…. Geographic characteristics… two groups… agriculture… trade…. Agriculture variables have relatively more explanatory power in countries that developed early and the trade variables have relatively more in countries that developed late…. Two technological shocks occur, one increasing agricultural productivity and the other decreasing transportation costs…. Agglomeration economies lead to persistence in urban locations. In countries that developed early, structural transformation due to rising agricultural productivity began at a time when transport costs were still relatively high…. When transport costs fell, these local agglomerations persisted. In late developing countries, transport costs fell well before structural transformation… [so] manufacturing agglomerated in relatively few, often coastal, locations….

The base covariates are… malaria and ruggedness…. Our agricultural covariates… temperature, precipitation, length of growing period, land suitability for agriculture, elevation, and latitude… 14 biome indicators…. Five trade variables… distances… to the nearest coast, navigable river, major lake, and natural harbor…