Large scale transport infrastructure investments connect both large metropolitan centers of production as well as small peripheral regions. Are the resulting trade cost reductions a force for the diffusion of industrial and total economic activity to peripheral regions, or do they reinforce the concentration of production in space? This paper exploits China's National Trunk Highway System as a large scale natural experiment to contribute to our understanding of this question. The network was designed to connect provincial capitals and cities with an urban population above 500,000. As a side effect, a large number of small peripheral counties were connected to large metropolitan city regions. To address non-random route placements on the way between targeted city nodes, I propose an instrumental variable strategy based on the construction of least cost path spanning tree networks. The estimation results suggest that network connections led to a reduction in GDP growth among no ntargeted peripheral counties due to reduced industrial output growth. Additional estimation results present evidence that appears consistent with the existence of core-periphery effects of trade integration as found in increasing returns trade theory and economic geography.

The arrival of global retail chains in developing countries is causing a radical transformation in the way that households source their consumption. This paper draws on a new collection of Mexican microdata to estimate the effect of foreign supermarket entry on household welfare. The richness of the microdata allows us to estimate a general expression for the gains from retail FDI, and to decompose these gains into several distinct channels. We find that foreign retail entry causes large and significant welfare gains for the average household that are mainly driven by a reduction in the cost of living. About one quarter of this price index effect is due to pro-competitive effects on the prices charged by domestic stores, with the remaining three quarters due to the direct consumer gains from shopping at the new foreign stores. We find little evidence of significant changes in average municipality-level incomes or employment. We do, however, find evidence of store exit, adverse effects on domestic store profits and reductions in the incomes of traditional retail sector workers. Finally, we show that the gains from retail FDI are on average positive for all income groups but regressive, and quantify the opposing forces that underlie this finding.

Tourism is a fast-growing services sector in developing countries. This paper combines a rich collection of Mexican microdata with a quantitative spatial equilibrium model and a new empirical strategy to study the long-term economic consequences of tourism both locally and in the aggregate. We find that tourism causes large and significant local economic gains relative to less touristic regions that are in part driven by significant positive spillovers on manufacturing. In the aggregate, however, these local spillovers are largely offset by reductions in agglomeration economies among less touristic regions, so that the national gains from trade in tourism are mainly driven by a classical market integration effect. (JEL L60, L83, O14, O18, R11, Z31, Z32)A conventional view in the literature on economic growth and development is that the production of traded goods is subject to dynamic productivity improvements, whereas the services sector is perceived to be more stagnant. 1 In line with this view, the locus of agglomeration economies is generally assumed to be the manufacturing sector, rather than services. This asymmetry has important implications for the growth strategies of developing countries, and whether they should prioritize the development of traded goods producing sectors. At the same time, there is relatively little empirical evidence on the economic consequences of the development of the services sector in developing countries, and whether the reallocation of factors of production into services can give rise to adverse long-term effects both locally and in the aggregate. 2 This paper sets out to study the economic consequences of tourism, a fast-growing services sector in developing countries. Tourism involves the export of otherwise non-traded local services by temporarily moving consumers across space, rather than 1 This view is in the tradition of Baumol (1967). See Herrendorf, Rogerson, and Valentinyi (2014) for a review of the recent literature, and McMillan and Rodrik (2011) for an analysis in the context of developing countries. 2 See, for example, Copeland (1991) for an early theoretical discussion of tourism as a potential "Dutch disease."

This paper estimates the impact of the first nationwide e-commerce expansion program on rural households. To do so, we combine a randomized control trial with new survey and administrative microdata. In contrast to existing case studies, we find little evidence for income gains to rural producers and workers. Instead, the gains are driven by a reduction in cost of living for a minority of rural households that tend to be younger, richer, and in more remote markets. These effects are mainly due to overcoming logistical barriers to e-commerce rather than additional investments to adapt e-commerce to the rural population. (JEL I31, L81, O12, O18, P25, P36)