Market potential and regional economic growth in Spain (1860-1930)

Abstract

In this study, parametric and nonparametric techniques are employed to analyze the effect of changes in regional market potential on the growth of Spanish regions during the period 1860-1930. The study of Spain sheds light on whether the construction of new transport infrastructures coupled with changes in trade policy ultimately shaped regional growth trajectories. The study draws upon new evidence of per capita gross domestic product for Spanish provinces and combines this evidence with Harris' market-potential function to measure regional market potential. Results show that market potential had a positive influence on regional economic growth, particularly between 1900 and 1930.