Skip to main content
Article thumbnail
Location of Repository

Trade and the effect of public investment on regional inequalities in heterogeneously integrated areas

By Joan Costa-i-Font and Eduardo Rodriguez-Oreggia


Regional integration, it is argued, challenges the distribution of economic activity among regions. However, the government role in shifting the patterns of regional inequalities is still under debate and has received small comprehensive empirical evidence. This paper examines the hypothesis of trade as channelling public investment and, thus, perpetuating regional inequalities. We argue that the interplay of public and private investment plays a key role in stimulating trade and economic activity. To avoid problems of cross-country heterogeneity and comparability this study examines data for two countries; Mexico and Spain, both followers of trade integration arrangements. Findings indicate that regional inequalities in Mexico are significantly explained by differences in export capacity serving to boost private investment whereas inequalities in Spain are appreciably driven by previous endowments and private capital formation

Topics: H Social Sciences (General), HB Economic Theory
Publisher: Wiley-Blackwell Publishing Ltd.
Year: 2005
DOI identifier: 10.1111/j.1467-9701.2005.00710.x
OAI identifier:
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://www3.interscience.wiley... (external link)
  • (external link)
  • Suggested articles

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