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The economic geography of trade, production and income : a survey of empirics

Overman, Henry G. ORCID: 0000-0002-3525-7629, Redding, Stephen and Venables, Anthony (2003) The economic geography of trade, production and income : a survey of empirics. In: Choi, E. Kwan and Harrigan, James, (eds.) Handbook of International Trade. Blackwell handbooks in economics. Blackwell Publishing Ltd., Malden, Massachussetts, pp. 353-387. ISBN 0631211616

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This paper surveys the empirical literature on the economic geography of trade flows, factor prices, and the location of production. The discussion is structured around the empirical predictions of a canonical theoretical model. We review empirical evidence on the determinants of trade costs and the effects of these costs on trade flows. Geography is a major determinant of factor prices, and access to foreign markets alone is shown to explain some 35% of the cross-country variation in per capita income. The paper documents empirical findings of home market (or magnification) effects, suggesting that imperfectly competitive industries are drawn more than proportionately to locations with good market access. Sub-national evidence establishes the presence of industrial clustering, and we examine the roles played by product market linkages to customer and supplier firms, knowledge spillovers, and labour market externalities.

Item Type: Book Section
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Additional Information: This is an electronic version of a book section published in E. Kwan Choi & James Harrigan (Eds). Handbook of international trade. Blackwell handbooks in economics, 2003, pp. 353-387 © 2003 Blackwell Publishing. LSE has developed LSE Research Online so that users may access research output of the School. Copyright and Moral Rights for the papers on this site are retained by the individual authors and/or other copyright owners. Users may download and/or print one copy of any article(s) in LSE Research Online to facilitate their private study or for non-commercial research. You may not engage in further distribution of the material or use it for any profit-making activities or any commercial gain. You may freely distribute the URL (<>) of the LSE Research Online website.
Divisions: Centre for Economic Performance
Subjects: G Geography. Anthropology. Recreation > G Geography (General)
H Social Sciences > HB Economic Theory
Date Deposited: 30 Jun 2006
Last Modified: 16 May 2024 04:54

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