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Agglomeration and economic development: import substitution vs. trade liberalisation

Puga, D and Venables, Tony (1999) Agglomeration and economic development: import substitution vs. trade liberalisation. The Economic Journal, 109 (455). pp. 292-311. ISSN 0013-0133

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Identification Number: 10.1111/1468-0297.00433


This paper analyses a model of economic development in which international differences in industrial structure and income are caused by the agglomeration of industry in a subset of countries. Economic development may not be a gradual process of convergence by all countries, but instead involve countries moving sequentially from the group of poor countries to the group of rich countries. The role of trade policy in promoting industrialisation is studied. While both import substitution and unilateral trade liberalisation may be ‘successful’ in attracting industry, they attract different sectors and welfare levels are higher under trade liberalisation.

Item Type: Article
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Additional Information: © 1999 Royal Economic Society
Divisions: LSE
Date Deposited: 27 Apr 2007
Last Modified: 20 Jun 2021 01:29

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