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Regional integration, international liberalisation and the dynamics of industrial agglomeration

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  • Commendatore, Pasquale
  • Kubin, Ingrid
  • Petraglia, Carmelo
  • Sushko, Iryna

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, conditional to the skill endowment and the market size of the outside region. 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 an asymmetric distribution of economic activities is one of the possible long-run outcomes which may allow a smooth transition to agglomeration (in contrast to the NEG typical catastrophic scenario). In addition, we show that multistability is pervasive and that some attractors are Milnor attractors. Both results reinforce the NEG narrative on the importance of initial conditions for the long-run location of industrial activity.

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  • Commendatore, Pasquale & Kubin, Ingrid & Petraglia, Carmelo & Sushko, Iryna, 2014. "Regional integration, international liberalisation and the dynamics of industrial agglomeration," Journal of Economic Dynamics and Control, Elsevier, vol. 48(C), pages 265-287.
    • Handle: RePEc:eee:dyncon:v:48:y:2014:i:c:p:265-287
    DOI: 10.1016/j.jedc.2014.07.011
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    4. Commendatore, Pasquale & Kubin, Ingrid & Sushko, Iryna, 2022. "Big or small? A new economic geography model with an endogenous switch in the market structure," Chaos, Solitons & Fractals, Elsevier, vol. 161(C).
    5. Pasquale Commendatore & Ingrid Kubin & Pascal Mossay & Iryna Sushko, 2015. "Dynamic agglomeration patterns in a 2-country NEG model with 4 regions," Gecomplexity Discussion Paper Series 10, Action IS1104 "The EU in the new complex geography of economic systems: models, tools and policy evaluation", revised Feb 2015.
    6. Commendatore, Pasquale & Kubin, Ingrid & Mossay, Pascal & Sushko, Iryna, 2015. "Dynamic agglomeration patterns in a two-country new economic geography model with four regions," Chaos, Solitons & Fractals, Elsevier, vol. 79(C), pages 2-17.
    7. Ikeda, Kiyohiro & Onda, Mikihisa & Takayama, Yuki, 2018. "Spatial period doubling, invariant pattern, and break point in economic agglomeration in two dimensions," Journal of Economic Dynamics and Control, Elsevier, vol. 92(C), pages 129-152.
    8. Gaspar, José M. & Ikeda, Kiyohiro & Onda, Mikihasa, 2021. "Global bifurcation mechanism and local stability of identical and equidistant regions: Application to three regions and more," Regional Science and Urban Economics, Elsevier, vol. 86(C).
    9. Nuria Gallego & José L. Zofío, 2018. "Trade Openness, Transport Networks and the Spatial Location of Economic Activity," Networks and Spatial Economics, Springer, vol. 18(1), pages 205-236, March.
    10. I-Ju Tsai, 2017. "A theoretical assessment on the trading arrangements for a small Asian economy with footloose entrepreneur movement toward China," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 59(2), pages 393-417, September.
    11. Askar, S.S. & Al-khedhairi, A., 2020. "On complex dynamic investigations of a piecewise smooth nonlinear duopoly game," Chaos, Solitons & Fractals, Elsevier, vol. 139(C).
    12. Askar, S.S. & Al-khedhairi, A., 2020. "The dynamics of a business game: A 2D-piecewise smooth nonlinear map," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 537(C).
    13. Mikhail Anufriev & Davide Radi & Fabio Tramontana, 2018. "Some reflections on past and future of nonlinear dynamics in economics and finance," Decisions in Economics and Finance, Springer;Associazione per la Matematica, vol. 41(2), pages 91-118, November.
    14. DELLOYE Justin, & PEETERS Dominique, & THARAKAN Joe,, 2018. "Equilibrium selection and stability in dynamic core-periphery models with heterogeneous preferences," LIDAM Discussion Papers CORE 2018002, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    15. Elisha Mavodyo, 2020. "A Revival of Budget Deficit and Economic Growth," EERI Research Paper Series EERI RP 2020/04, Economics and Econometrics Research Institute (EERI), Brussels.
    16. Schmitt, Noemi & Tuinstra, Jan & Westerhoff, Frank, 2017. "Side effects of nonlinear profit taxes in an evolutionary market entry model: Abrupt changes, coexisting attractors and hysteresis problems," Journal of Economic Behavior & Organization, Elsevier, vol. 135(C), pages 15-38.
    17. Sameh Askar, 2021. "Complex Investigations of a Piecewise-Smooth Remanufacturing Bertrand Duopoly Game," Mathematics, MDPI, vol. 9(20), pages 1-13, October.
    18. Radi, Davide & Lamantia, Fabio & Italo Bischi, Gian, 2021. "Offshoring, Reshoring, Unemployment, And Wage Dynamics In A Two-Country Evolutionary Model," Macroeconomic Dynamics, Cambridge University Press, vol. 25(3), pages 705-732, April.

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    More about this item

    Keywords

    Industrial agglomeration; New economic geography; Footloose entrepreneurs; Local and global dynamics; Bifurcation scenarios;
    All these keywords.

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F2 - International Economics - - International Factor Movements and International Business
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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