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Asia’s geographic development

Author(s): Desmet, Klaus; Nagy, David Krisztian; Rossi-Hansberg, Esteban A.

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Abstract: © 2017 Asian Development Bank and Asian Development Bank Institute. This paper studies the impact of spatial frictions on Asia’s long-term spatial development. Using the framework provided in Desmet, Nagy, and Rossi-Hansberg (2016), we analyze the evolution of Asia’s economy and the relative performance of specific regions and countries. We then perform a number of counterfactual experiments and find that a worldwide drop in transport costs of 40% increases the present discounted value of real income by 70.7% globally and 78% in Asia. These figures are much larger than those found in standard quantitative trade models because they include dynamic effects and take into account intracountry transport costs. We also perform exercises in which we upgrade Asia’s road network or relax migratory restrictions between locations in Asia. These exercises emphasize the important role of spatial frictions in the development of Asia’s economy.
Publication Date: 23-Aug-2017
Citation: Desmet, K, Nagy, DK, Rossi-Hansberg, E. (2017). Asia’s geographic development. Asian Development Review, 34 (2), 1 - 24. doi:10.1162/adev_a_00093
DOI: doi:10.1162/adev_a_00093
ISSN: 0116-1105
Pages: 1 - 24
Type of Material: Journal Article
Journal/Proceeding Title: Asian Development Review
Version: Final published version. Article is made available in OAR by the publisher's permission or policy.

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