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Regional integration, international liberalisation and the dynamics of industrial agglomeration

Commendatore, Pasquale and Kubin, Ingrid and Petraglia, Carmelo and Sushko, Iryna (2014) Regional integration, international liberalisation and the dynamics of industrial agglomeration. Department of Economics Working Paper Series, 164. WU Vienna University of Economics and Business, Vienna.

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Abstract

This paper presents a 3-Region footloose-entrepreneur new economic geography model. Two symmetric regions are part of an economically integrated area (the Union), while the third region represents an outside trade partner. We explore how the spatial allocation of industrial production and employment within the Union is affected by changes in two aspects of trade liberalisation: regional integration and globalisation. Our main contribution pertains to the analysis of the local and global dynamics of the specified factor mobility process. We show that significant parameter ranges exist for which asymmetric distribution of economic activities is one of the possible long-run outcomes. This is a remarkable result within the NEG literature. We then analyse the impact of international trade liberalisation on the dynamics of agglomeration conditional on the endowments of skilled and unskilled labour of the outside region. (authors' abstract)

Item Type: Paper
Keywords: Industrial agglomeration / New Economic Geography / footloose entrepreneurs / local and global dynamics / bifurcation scenarios
Classification Codes: JEL C62, F12, F2, R12
Divisions: Departments > Volkswirtschaft
Depositing User: Claudia Tering-Raunig
Date Deposited: 04 Feb 2014 12:58
Last Modified: 04 Feb 2014 12:58
URI: http://epub.wu.ac.at/id/eprint/4079

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