Spatial Disparities in Developing Countries: Cities, Regions and International Trade

Spatial inequality in developing countries is due to the natural advantages of some regions relative to others and to the presence of agglomeration forces, leading to clustering of activity. This paper reviews and develops some simple models that capture these first and second nature economic geographies. The presence of increasing returns to scale in cities leads to urban structures that are not optimally sized. This depresses the return to job creation, possibly retarding development. Looking at the wider regional structure, development can be associated with large shifts in the location of activity as industry goes from being inward looking to being export oriented.cities, spatial disparities, urbanisation, developing countries

A Multi-Country Approach to Factor Proporations Trade and Trade Costs

Classic trade questions are reconsidered by generalizing a factor-proportions model to multiple countries, multi-stage production, and country-specific trade costs. We derive patterns of production specialization and trade for a matrix of countries that differ in relative endowments (columns) and trade costs (rows). We demonstrate how the ability to fragment production and/or a proportional change in all countries’ trade costs alters these patterns. Production specialization and the volume of trade are higher with fragmentation for most countries but interestingly, for a large block of countries, these variables fall following fragmentation. Countries with moderate trade costs engage in market-oriented assembly, while those with lower trade costs engage in export-platform production. These two cases correspond to the concepts of horizontal and vertical affiliate production in the literature on multinational enterprises. Increases in specialization and the volume of trade accelerate as trade costs go to zero with and without fragmentation. Classification-

Geography and International Inequalities: the Impact of New Technologies

Some writers have predicted that new technologies mean the 'death of distance', allowing suitably skilled economies to converge with high income countries. This paper evaluates this claim. It argues that geography matters for international income inequalities, and that new technologies will change, but not abolish this dependence. Some activities may become more entrenched in high income countries than they are at present. Others - where information can be readily codified and digitized - will relocate, but typically only to a subset of lower income countries. These countries will benefit, but other countries will continue to experience the costs of remoteness.

Integration, Specialization, and the Adjustment

In the United States, many industries have a Silicon Valley-type geographic localization. In Europe, these same industries often have four or more major centers of production. This difference is presumably the result of the formal and informal trade barriers that have divided the European market. With the growing integration of that market, however, there is the possibility that Europe will develop an American-style economic geography. This paper uses a theoretical model of industrial localization to demonstrate this possibility, and to show the possible transition costs associated with this shift.

Globalization in History: A Geographical Perspective

This paper argues that a geographical perspectie is fundamental to understanding comparative economic development in the context of globalization. Central to this view is the role of agglomeration in productivity performance; size and location matter. The tools of the new economic geography are used to illuminate important epidsodes when the relative position of major eeconmies radically changed; the rise of the United States at the beginning and of East Asia at the end of the twentieth century. It is suggested that while lack of high quality institutions has been a major reason for falling behind geographic disadvantage also merits attention.Globalization, economic geography, economic history

Timeliness, Trade and Agglomeration

An important element of the cost of distance is time taken in delivering final and intermediategoods. We argue that time costs are qualitatively different from direct monetary costs such asfreight charges. The difference arises because of uncertainty. Unsynchronised deliveries candisrupt production, and delivery time can force producers to order components beforedemand and cost uncertainties are resolved. Using several related models we show that thiscan cause clustering of component production. If final assembly takes place in two locationsand component production has increasing returns to scale, then component production willtend to cluster around just one of the assembly plants.Just- in-time, clustering, location, trade.

The Economics of Isolation and Distance

This paper explores the economic implications of isolation and remoteness. Evidence on the impact of distance on trade costs and trade flows is reviewed, and the effects of remoteness on real incomes are investigated. Empirical work confirms the predictions of theory, that distance from markets and sources of supply can have a significant negative impact on per capita income. The possible implications of new technologies for these spatial inequalities are discussed.Economic isolation, market access, trade costs.

Yawning gaps.

Why has globalisation brought such large increases in exports to some countries and not to others? Stephen Redding and Anthony Venables look at the way internal geography and domestic institutions seem to be a large part of the answer.

Geographical disadvantage - a Heckscher-Ohlin-von Thunen model of international specialization

The combination of distance, poor infrastructure, and being landlocked by neighbors with poor infrastructure, can make transport costs many times higher for some developing countries than for most others. Drawing on two traditions of economic modeling --Heckscher-Ohlin trade theory and von Thunen's work on the"isolated state"- the authors analyze the trade and production patterns of countries located at varying distances from an economic center. Predicting a country's production and trade pattern requires a knowledge of the country's location, its factor endowment, and the factor and transport intensities of goods. The authors define transport intensity and show how location and transport intensity should be combined with factor abundance and factor intensity, in determining trade flows. A theory based on only one set of those variables, such as factor abundance, will systematically make incorrect predictions. They report that geography and endowments interact in such a way that the world divides up into economic zones with different trade patterns. Countries close to the economic center may specialize in transport-intensive activities; countries further out become diversified, producing, and sometimes trading more goods; countries still further out may become import-substituting (replacing some of their imports from the center with local production); in the extreme, regions become autarkic. More remote locations have lower real incomes. Globalization changes the terms of trade, improving the welfare of regions further out from economic centers, though reducing the welfare of closer regions. Where will a new activity, such as assembly of a new product, locate? Remote locations are disadvantaged if the product has high transport intensity (perhaps because of heavy requirements for intermediate inputs). But the costs of remoteness are already incorporated into the factor prices of those regions, which makes them more attractive. Which location is chosen depends, therefore, on how existing activities compare with the new activity in transport intensity and factor intensity.Transport Economics Policy&Planning,Environmental Economics&Policies,Payment Systems&Infrastructure,Economic Theory&Research,Labor Policies,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Banks&Banking Reform,Transport Economics Policy&Planning,Economic Theory&Research,Environmental Economics&Policies