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The Effects of Globalization on Regional Inequality in a Model of Semi-endogenous Growth and Foot-loose Capital

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  • Katsufumi Fukuda

    (Graduate School of Social Science, Hiroshima University, Japan and Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)

Abstract

We show that manufacturing firms locate only in northern regions when transportation costs are not high, and in both northern and southern regions when transportation costs are high; we do so through the use of a semi-endogenous research and development growth model with international trade, footloose capital, and local knowledge spillover. Regional income inequality—defined as per-capita expenditure relative to price index—decreases in the latter case, because the northern share of expenditure does not change, on account of a constant and exogenous growth rate. The northern price index does not change, even as the southern price index decreases.

Suggested Citation

  • Katsufumi Fukuda, 2013. "The Effects of Globalization on Regional Inequality in a Model of Semi-endogenous Growth and Foot-loose Capital," Discussion Paper Series DP2013-25, Research Institute for Economics & Business Administration, Kobe University, revised May 2015.
    • Handle: RePEc:kob:dpaper:dp2013-25
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    File URL: https://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2013-25.pdf
    File Function: First version, 2013
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    References listed on IDEAS

    as
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