Javier Andres Santiago
Department of Economics
University of Colorado at Boulder
Boulder, CO 80309
NBER Working Papers and Publications
|January 2016||Foreigners Knocking on the Door: Trade in China During the Treaty Port Era|
with Wolfgang Keller, Carol H. Shiue: w21886
Uneven development within countries suggests that domestic trade frictions are important. Trade flows within a country, however, are rarely observed. We employ a new dataset on trade between fifteen Chinese treaty ports to examine the importance of domestic frictions around the year 1900. The distribution of welfare effects depends on each port's productivity and factor costs, China's economic geography as it influences trade costs, as well as the degree of regional diversity in production, which increases the potential gains from trade. We utilize this framework to quantify the size and distribution of welfare effects resulting from new technology and lower trade costs. Domestic trade frictions turn out to be substantial, far from the frictionless world that is commonly assumed. Moreover,...