Transportation Costs and the Great Divergence
CESifo, Munich, 2014
CESifo Working Paper No. 4766
This work shows the asymmetric effect of the reduction in transportation costs across different sectors in the process of the Great Divergence. Specifically, the analysis indicates that reductions in transportation costs of industrial goods enhance convergence of the growth rates of trading economies. In contrast, reductions in transportation costs of non-industrial goods contribute to a further divergence across countries.
Fiscal Policy, Macroeconomics and Growth
Trade Policy