Market Potential and Development : A Background Paper for the World Development Report
Evidence on the long-term impact of market potential on economic development is examined. The paper derives a structural estimation based on the New Economic Geography literature where the level of factors income of a country is related to its export capacity. It evaluates this market potential at t...
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| Language: | English |
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Washington, DC: World Bank
2012
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| Online Access: | http://hdl.handle.net/10986/9166 |
| Summary: | Evidence on the long-term impact of market potential on economic development is examined. The paper derives a structural estimation based on the New Economic Geography literature where the level of factors income of a country is related to its export capacity. It evaluates this market potential at the aggregate and industry levels for all countries in the world with available trade data over the 1960-2003 period and relates it to income per capita. Overall results show that market potential is a powerful driver of increases in income per capita and average wages. |
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