This paper studies the effects of domestic trade costs on comparative advantage. I build a model of international trade and internal geography that considers both international shipping routes and input-output linkages. I use the model to simulate how a large infrastructure project, Ruta del Sol, affects the specialization of Colombia, a country whose exports are highly concentrated in the mining sector. This road improves the access to global markets for both mining and manufacturing regions. To quantify the model, I use customs administrative records, a transportation survey, and geospatial data generated from both physical and digital road maps. My results indicate that the road project shifts the comparative advantage of Colombia away from mining, and towards manufacturing. Lastly, I provide evidence that the change in comparative advantage is larger when industry linkages are considered, because access to tradable intermediate inputs benefits more the manufacturing sector relative to the mining sector. The results demonstrate that domestic trade costs shape national comparative advantage, beyond the elements typically analyzed in the literature such as labor, capital, technology and institutions.
Airport Jose Maria Cordoba, Medellin, Colombia
We examine the role of urban infrastructure in the existence of distortions in the manufacturing sector for a developing nation context. Existing literature has quantified the size of misallocation in low and middle-income nations, but the phenomenon is still considered a black box. We examine how new local infrastructure in urban areas affects misallocation: via improvements in market access or through increases in intermediate-input access. Additionally, we analyze how new infrastructure affects the productivity of firms.
Environmental Shocks to Urban Amenities and Habit Formation
(Work in progress, with Hannah Bolder)
This research project provides evidence that temporal environmental shocks to urban amenities can have medium-term effects on the welfare of city-dwellers due to habit formation preferences. Specifically, we show that a temporal environmental shock can impact future consumption patterns. This paper is policy-relevant for urban areas in developing nations, and poor cities in developed countries, because these urban areas face financial limitations when they implement policies to ameliorate the negative impact of pollution.