Long-Distance Trade and Long-Term Persistence

Thu, 01 Jan 2026 00:00:00 +0000

This paper asks whether the location of economic activity adapts to changes in the location of trading opportunities, or whether historical patterns of trade permanently fix where cities emerge and grow. The question is fundamental to economic geography: many large cities owe their origins to access to long-distance trade that has since moved on, yet the cities persist. The empirical context is the staggered liberalization of direct transatlantic trade across the Spanish Empire in the second half of the 18th century. Before the reform, a mercantilist system confined legal trade to four American ports (Cartagena de Indias, Callao, Portobello/Nombre de Dios, and Veracruz) and a single European port (Seville, then Cadiz). Following Spain’s defeat in the Seven Years’ War, a sequence of decrees opened direct trade to an additional 40-plus ports between 1765 and the early 19th century. The reform was driven by European interstate competition and implemented from above, creating staggered, quasi-exogenous variation in transportation times to Europe across American cities.

Sebastian Ellingsen | Macro Paper Warehouse

Long-Distance Trade and Long-Term Persistence