The role of geography in development paul krugman april 1998 paper prepared for the annual world bank conference on development economics, washington, d. Is geography dead or destiny in a globalizing world. Lecture slides international economics i economics. Hanson 1996, 1998a, 1998b and krugman and hanson 1994 dis cuss the effects that previous stages of north american integration have had on location decisions. The role of geography in development paul krugman april.
Despite the geography is dead claims, many notable economic geographers emphasize the critical role of geography in trade, as well as in innovation, knowledge and development krugman 1993. Trade and geography in the economic origins and spread of. Empirics of international trade and economic geography most papers can be downloaded as pdf files from this web site access is password protected. The new economic geography, now middleaged paul krugman prepared for presentation to the association of american geographers, april 16, 2010 its almost exactly 20 years since i delivered a set of lectures in leuven that became the monograph geography and trade krugman 1991a, which most people consider the beginning of the new economic. An integrated treatment and empirical evidence of the latest models of trade, such as the gravity, ricardian, factor. Delors didnt confront the problems of either the welfare state or the ems. International trade theory, in particular, convention ally treats nations as dimensionless points and frequently assumes. Geography hereinafter neg, that is, a body of research initially stemming from international trade theory which fundamentally attempts to explain the formation of a large variety of economic agglomeration or concentration in geographical space fujita and krugman, 2004, p. In the context of the proposed theory this particular type of geography in presence of trade opportunities conferred di. Increasing returns, monopolistic competition, and international trade paul r. Krugmans main research areas, which have made him stand out in the academic community, are international economics, with a focus in trade and international nance, and economic geography. Development, geography, and economic theory the author of the book.
In the conditions of indian trade krugmans new trade theory with a strategic trade policy and new economic geography of scale economies offers some light, but. He is ranked by the research papers in economics repec as one of the worlds most inuential economists. It is well known that the effects of globalization are not distributed uniformly throughout the global. In addition to allowing for an arbitrary geography, our framework departs from the standard model of economic geography based on krugman 1991, and extensively analyzed by fujita, krugman, and venables 1999, in three ways. D from mit, he became a professor of economics and. S, minimize total costs by having only one plant located in home, from which you export obvious point which it took a decade to notice. Henderson 1982 and rauch 1991 model systems of cities in an open economy framework.
Requests for public domain copies of the key papers cited. Paul krugmans coreperiphery model was recognized as the starting point of the new economic geography in the citation for his 2008 nobel prize. Paul krugmans geographical economics and its implications. First, our paper endogenizes trade costs and so it naturally relates to the large literature in international trade studying the importance of trade costs in explaining trade. The facts of economic geography are surely among the most striking features of realworld. In fact, he argues that the main reason for considering models of economic geography is the laboratory they provide for. Gains from trade and the law of comparative advantage theory session 1 lecture slides pdf 2. Paul krugman and the 2008 nobel prize for economics steven brakman. The findings, interpretations, and conclusions expressed in this paper are entirely those of the author. He explained that the root cause of european unemployment was a lack of competitiveness with the united states and japan and that the solution was a program of investment in infrastructure and high technology. Krugmans interventions into economic geography have in turn allowed him to develop and articulate his own view of the future of social science.
Trade, geography, and microfoundations wonkish april 5, 2015 3. On krugmans model of economic geography sciencedirect. Even today, free trade, globalization, and urbanization remain as commonplace topics in the popular debate as well as in scholarly analyses. Harry garretsen to cite this article brakman, steven andgarretsen, harry2009 trade and geography. Helpman and krugman, like earlier works in regional science, the new economic geography deals with. In geography and trade he provides astimulating synthesis of ideas in the literature and describes new models for implementing a studyof economic geography that could.
Economic geography and regional production structure. The new economic geography was mainly a story about manufacturing, and in 1991 highincome nations accounted for 84 percent of the world. New economic geography is a term used in two ways in the international literature. Within each half, core theory chapters are followed by a series of application chapters that confront policy questions using the newest empirical work, data, and policy debates. Today that fraction is below 70 percent, with most of the growth in manufacturing taking place in emerging nations, above all china. Theories of international trade in which geography do play a role, such as the wellknown heckscherohlin theory. The ricardian model theory, part i session 2 lecture slides pdf 3. Krugman observes that his ownshortcomings in ignoring economic geography have been shared by many professional economists,primarily because of the lack of explanatory models. The home market effect cheating version home market size s, foreign market size s fixed cost of opening plant f, transport cost. Pauls work on new trade led relatively quickly and naturally to his 1991 monograph geography and trade, which soon spawned the new economic geography.
Increasing returns and international trade krugman 1979 helped pioneer incorporation of increasing returns and product differentiation into trade models remarkably, the paper achieves all of this in only ten pages, and in a very simple and transparent fashion prize committee of the royal swedish academy of sciences, 2008. Over the centuries, international trade and the location of economic activity have been at the forefront of economic thought. In order to ensure that students are up to date on key issues, the authors have thoroughly updated the content and extensively revised several chapters. International trade theory, in particular, convention. To mitigate the trade disruption and secure access to trade networks the rich had to make concessions towards the poor. Geography and trade krugman pdf monograph geography and trade krugman a, which most people economic advisers, not a council of geographical advisers, the. This could arise, for example, due to lower interregional trade costs, which theory suggests should strengthen economic geography e. Mainly my work in trade and geography was about understanding the world, not driving a political agenda. About the work the new york times paul krugman blog. In geography and trade he provides a stimulating synthesis of ideas in the literature and describes new models for implementing a study of economic geography that could. Paul krugman and the 2008 nobel prize for economics, spatial economic analysis, 4.
The study of economic geographyof the location of factors of pro duction in spaceoccupies a relatively small part of standard eco nomic analysis. Increasing returns and economic geography paul krugman. Geography, transportation, and endogenous trade costs. He was also known for his oped column in the new york times krugman was awarded a b. Krugman 1991a,b, models various ways in which production patterns and therefore trade patterns can change with integration because of its effects on firms optimal location decisions. In this book krugman attempts to marry economic geography the location of production in space to international trade theory. These revisions respond both to users suggestions and to some important developments on the theoretical and practical sides of. Paul krugman, in full paul robin krugman, born february 28, 1953, albany, new york, u.
In 2008, krugman was awarded the nobel memorial prize in economic sciences for his contributions to new trade theory and. Krugman 1979, 1980, 1991 international trade theory in 1979. Trade, geography, and microfoundations wonkish the new. The work of krugman and associates has become known as the new economic. Although the book does not provide a complete model of the resulting new trade theory, it does offer many new ideas and interesting entry points for such a model and krugman has offered models elsewhere. Thus, an investigation that examines the trade of regions may provide the best hope for identifying such e. Paul krugman is an economist and writer from the united states, known for his work on international economics. A graphical exposition of krugmans coreperiphery model. First, and foremost, it is used as the work done by paul krugman. Neg originates in international trade theory, not in economic geography or growth theory we proceed in 3 steps.
Download ebook development, geography, and economic theory. In a new economic geography context, krugman and livaselizondo 1996 and behrens et al. Krugman observes that his own shortcomings in ignoring economic geography have been shared by many professional economists, primarily because of the lack of explanatory models. In the following, i shall survey the new economic geography literature and evaluate its contribution relative to earlier work on similar topics. Related literature we relate to three broad strands of literature. Paul krugmans work, in particular, has been very influential in promoting this view. In geography and trade he provides astimulating synthesis of ideas in the literature and describes new models for implementing a studyof economic geography that could change the nature of the field. The new economic geography, now middleaged paul krugman prepared for presentation to the association of american geographers, april 16, 2010 its almost exactly 20 years since i delivered a set of lectures in leuven that became the monograph geography and trade krugman 1991a, which most people consider the beginning.
Pauls models formed the core of the new trade theory, which rapidly generated a paradigm shift in thinking about trade that persists today. According to krugman, in a world of imperfect competition, international trade is driven as much by increasing returns and external economies as by comparative advantage. First, we dispense with the assumption of a homogeneous freely traded good, and thus nominal wages are allowed to vary. Publication date 1997 topics development economics, economic geography publisher. International economics and geography harry garretsen1. Since the publication of paul krugmans geography and trade in 1991, a burgeoning literature has developed under the heading new economic geography. Internal geography, international trade, and regional. Krugman yale university, new haven, ct06520, usa received november 1978, revised version received february 1979 this paper develops a simple, general equilibrium model of noncomparative advantage trade.
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