Location of Repository

Globalization and the inequality of nations

By P Krugman and Tony Venables

Abstract

A monopolistically competitive manufacturing sector produces goods used for final consumption and as intermediates. Intermediate usage creates cost and demand linkages between firms and a tendency for manufacturing agglomeration. How does globalization affect the location of manufacturing and gains from trade? At high transport costs all countries have some manufacturing, but when transport costs fall below a critical value, a core-periphery spontaneously forms, and nations that find themselves in the periphery suffer a decline in real income. At still lower transport costs there is convergence of real incomes, in which peripheral nations gain and core nations may lose

Topics: HB Economic Theory
Publisher: Oxford University Press
Year: 1995
DOI identifier: 10.2307/2946642
OAI identifier: oai:eprints.lse.ac.uk:1071
Provided by: LSE Research Online
Download PDF:
Sorry, we are unable to provide the full text but you may find it at the following location(s):
  • http://qje.oxfordjournals.org/ (external link)
  • http://eprints.lse.ac.uk/1071/ (external link)
  • Suggested articles


    To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.