TY  - JOUR
AU  - Davis,Donald R.
AU  - Weinstein,David E.
TI  - Economic Geography and Reginal Production Structure: An Empirical Investigation
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6093
PY  - 1997
Y2  - July 1997
UR  - http://www.nber.org/papers/w6093
L1  - http://www.nber.org/papers/w6093.pdf
N1  - Author contact info:
Donald R. Davis
Department of Economics
Columbia University
1004 International Affairs Building
420 West 118th St.
New York, NY 10027
Tel: 212/854-4037
Fax: 212/854-8059
E-Mail: drd28@columbia.edu

David Weinstein
Columbia University, Department of Economics
420 W. 118th Street
MC 3308
New York, NY  10027
Tel: 212/854-6880
Fax: 212/854-8059
E-Mail: dew35@columbia.edu
AB  - There are two principal theories of why countries or regions trade: comparative advantage and increasing returns to scale. Yet there is virtually no empirical work that assesses the relative importance of these two theories in accounting for production structure and trade.  We use a framework that nests an increasing returns model of economic geography featuring market effects trade models to account for the structure of regional production in Japan.  We find support for the existence of economic geography effects in eight of nineteen manufacturing sectors, including such important ones as transportation equipment, iron and steel, electrical machinery, and chemicals.  Moreover, we find that these effects are economically very significant.  The latter contrasts with the results of Davis and Weinstein (1997), which found scant economic significance of economic geography for the structure of OECD production.  We conclude that while economic geography may explain little about the international structure of production, it is very important for understanding the regional structure of production.
ER  -