Kelly, MorganMorganKelly2008-08-292008-08-29Copyright1997-08Quarterly Journal of Economics0033-5533http://hdl.handle.net/10197/521This paper analyzes the evolution of an economy where growth is driven by increased specialization caused by the geographical expansion of markets. It proves that such Smithian growth exhibits generic threshold behavior. Below a critical density of transport linkages, the economy is split into isolated local markets with limited specialization. Above the critical density, these markets begin to fuse into a large, economywide market causing growth to accelerate. This allows an explicit test of the consensus among historians of Sung dynasty China that the economic revolution during that period was a result of commercialization caused by the creation of a national waterway network.4640 bytesapplication/pdfenAll rights reservedEconomic developmentExpertiseMarketsJournal Article112393996410.1162/003355397555398https://creativecommons.org/licenses/by-nc-sa/1.0/