본문 내용으로 건더뛰기

KDI 경제정보센터

ENG
  • Economic

    Information

    and Education

    Center

국제무역
Melitz Meets Lewis: The Impacts of Roads on Structural Transformation and Businesses
NBER
2024.05.17
This paper examines the impact of roads on structural transformation and business composition theoretically and empirically. We develop a two-sector model of regional trade with endogenous firm entry that highlights two opposing forces. \textit{Ceteris paribus} lower trade costs in non-agriculture lead to fewer firms, but cheaper agricultural imports releases labor from local agricultural production leading to more firms. Using major highway programs in India and China, we find results broadly consistent with the theory, with declines in the number of businesses where structural transformation is weak, and increases where it is strong.