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The Spread of Industry: Spatial Agglomeration in Economic Development

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Author Info
Puga, Diego
Venables, Anthony J.

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Abstract

This paper describes the spread of industry from country to country as a region grows. All industrial sectors are initially agglomerated in one country, tied together by input-output links between firms. Growth expands industry more than other sectors, bidding up wages in the country in which industry is clustered. At some point some firms start to move away, and when a critical mass is reached industry expands in another country, raising wages there. We establish the circumstances in which industry spills over, which sectors move out first, and which are more important in triggering a critical mass.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1354.

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Date of creation: Feb 1996
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Handle: RePEc:cpr:ceprdp:1354

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Related research
Keywords: Agglomeration; Industrialization; Linkages; Location;

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Find related papers by JEL classification:
F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
O14 - Economic Development, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
R12 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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This page was last updated on 2009-10-29.

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