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Globalization and the inequality of nations

Krugman, P and Venables, Tony (1995) Globalization and the inequality of nations. Quarterly Journal of Economics, 110 (4). pp. 857-880. ISSN 0033-5533

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Identification Number: 10.2307/2946642

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.

Item Type: Article
Official URL: http://qje.oxfordjournals.org/
Additional Information: © 1995 The President and Fellows of Harvard College and the Massachusetts Institute of Technology
Subjects: H Social Sciences > HB Economic Theory
JEL classification: F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance
Sets: Departments > Economics
Collections > Economists Online
Date Deposited: 27 Apr 2007
Last Modified: 27 Jun 2012 15:11
URI: http://eprints.lse.ac.uk/id/eprint/1071

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