IDEAS home Printed from https://ideas.repec.org/a/eee/dyncon/v48y2014icp265-287.html
   My bibliography  Save this article

Regional integration, international liberalisation and the dynamics of industrial agglomeration

Author

Listed:
  • 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.

Suggested Citation

  • 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
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0165188914001742
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jedc.2014.07.011?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Kristian Behrens, 2011. "International Integration And Regional Inequalities: How Important Is National Infrastructure?," Manchester School, University of Manchester, vol. 79(5), pages 952-971, September.
    2. James E. Anderson & Eric van Wincoop, 2004. "Trade Costs," Journal of Economic Literature, American Economic Association, vol. 42(3), pages 691-751, September.
    3. Marius Brülhart & Matthieu Crozet & Pamina Koenig, 2004. "Enlargement and the EU Periphery: The Impact of Changing Market Potential," The World Economy, Wiley Blackwell, vol. 27(6), pages 853-875, June.
    4. Crozet, Matthieu & Koenig Soubeyran, Pamina, 2004. "EU enlargement and the internal geography of countries," Journal of Comparative Economics, Elsevier, vol. 32(2), pages 265-279, June.
    5. Neil Foster & Robert Stehrer & Marcel Timmer, 2013. "International fragmentation of production, trade and growth: Impacts and prospects for EU member states," European Economy - Economic Papers 2008 - 2015 484, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    6. Krugman, Paul & Elizondo, Raul Livas, 1996. "Trade policy and the Third World metropolis," Journal of Development Economics, Elsevier, vol. 49(1), pages 137-150, April.
    7. Rikard Forslid & Gianmarco I.P. Ottaviano, 2003. "An analytically solvable core-periphery model," Journal of Economic Geography, Oxford University Press, vol. 3(3), pages 229-240, July.
    8. Maurice Obstfeld & Giovanni Peri, 1998. "Regional non-adjustment and fiscal policy," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 13(26), pages 206-259.
    9. Robert C. Johnson & Guillermo Noguera, 2012. "Fragmentation and Trade in Value Added over Four Decades," NBER Working Papers 18186, National Bureau of Economic Research, Inc.
    10. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
    11. Diego Puga, 2002. "European regional policies in light of recent location theories," Journal of Economic Geography, Oxford University Press, vol. 2(4), pages 373-406, October.
    12. Dorrucci, Ettore & Fratzscher, Marcel & Mongelli, Francesco Paolo & Firpo, Stefano, 2002. "European integration: what lessons for other regions? The case of Latin America," Working Paper Series 185, European Central Bank.
    13. Brakman,Steven & Garretsen,Harry & van Marrewijk,Charles, 2009. "The New Introduction to Geographical Economics," Cambridge Books, Cambridge University Press, number 9780521698030, December.
    14. N/A, 2004. "The World Economy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 187(1), pages 8-35, January.
    15. Pasquale Commendatore & Ingrid Kubin & Carmelo Petraglia & Iryna Sushko, 2012. "Economic integration and agglomeration in a customs union in the presence of an outside region," Department of Economics Working Papers wuwp146, Vienna University of Economics and Business, Department of Economics.
    16. N/A, 2004. "The World Economy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 188(1), pages 8-35, April.
    17. Olga Alonso-Villar, 2001. "Metropolitan areas and public infrastructure," Investigaciones Economicas, Fundación SEPI, vol. 25(1), pages 139-169, January.
    18. Gian Italo Bischi & Carl Chiarella & Iryna Sushko (ed.), 2013. "Global Analysis of Dynamic Models in Economics and Finance," Springer Books, Springer, edition 127, number 978-3-642-29503-4, September.
    19. Siebert, Horst, 1997. "Labor market rigidities and unemployment in Europe," Kiel Working Papers 787, Kiel Institute for the World Economy (IfW Kiel).
    20. Elisenda Paluzie, 2001. "articles: Trade policy and regional inequalities," Papers in Regional Science, Springer;Regional Science Association International, vol. 80(1), pages 67-85.
    21. Monfort, Philippe & Nicolini, Rosella, 2000. "Regional Convergence and International Integration," Journal of Urban Economics, Elsevier, vol. 48(2), pages 286-306, September.
    22. N/A, 2004. "The World Economy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 189(1), pages 8-36, July.
    23. Horst Siebert, 1997. "Labor Market Rigidities: At the Root of Unemployment in Europe," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 37-54, Summer.
    24. Jaejoon Woo, 2012. "Technological Upgrading in China and India: What Do We Know?," OECD Development Centre Working Papers 308, OECD Publishing.
    25. Commendatore, Pasquale & Kubin, Ingrid & Sushko, Iryna, 2015. "Typical bifurcation scenario in a three region identical New Economic Geography model," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 108(C), pages 63-80.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Noemi Schmitt & Jan Tuinstra & Frank Westerhoff, 2018. "Stability and welfare effects of profit taxes within an evolutionary market interaction model," Review of International Economics, Wiley Blackwell, vol. 26(3), pages 691-708, August.
    2. Kang, Jijun & Yu, Chenyang & Xue, Rui & Yang, Dong & Shan, Yuli, 2022. "Can regional integration narrow city-level energy efficiency gap in China?," Energy Policy, Elsevier, vol. 163(C).
    3. Fanchao Kong & Hongkai Zhang & Xiangyan Meng & Shuai Li & Jia Liu, 2022. "Can the Policy of National Urban Agglomeration Improve Economic and Environmental Gains? Evidence from Quasi-Natural Experiments with 280 Cities in China," IJERPH, MDPI, vol. 19(13), pages 1-18, June.
    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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. 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.
    3. Xi Yang & Nobuaki Hamaguchi, 2013. "Trade infrastructure and firm location under Cournot competition," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 50(1), pages 153-167, February.
    4. Jian Wang & Xiao-Ping Zheng, 2013. "Industrial Agglomeration: Asymmetry Of Regions And Trade Costs," Review of Urban & Regional Development Studies, Wiley Blackwell, vol. 25(2), pages 61-78, July.
    5. CRESPO, Nuno & FONTOURA, Maria Paula, 2013. "Regional Integration And Internal Economic Geography - An Empirical Evaluation With Portuguese Data," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 13(2), pages 99-116.
    6. 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.
    7. Miren Lafourcade & Elisenda Paluzie, 2008. "European integration, FDI and the geography of French trade," Working Papers halshs-00586834, HAL.
    8. Carolina Guevara, 2015. "The effect of trade on agglomeration within regions," Working Papers halshs-01233389, HAL.
    9. Grace Carolina GUEVARA-ROSERO, 2017. "The Effect of Trade on Agglomeration within Regions," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(1), pages 75-97, March.
    10. Sanguinetti, Pablo & Volpe Martincus, Christian, 2009. "Tariffs and manufacturing location in Argentina," Regional Science and Urban Economics, Elsevier, vol. 39(2), pages 155-167, March.
    11. Adolfo Cristobal-Campoamor & Osiris Parcero, 2013. "Behind the Eastern–Western European convergence path: the role of geography and trade liberalization," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 51(3), pages 871-891, December.
    12. Georg Hirte & Christian Lessmann, 2014. "Trade, Integration, and Interregional Inequality," CESifo Working Paper Series 4799, CESifo.
    13. Cem Karayalcin & Hakan Yilmazkuday, 2015. "Trade and Cities," The World Bank Economic Review, World Bank, vol. 29(3), pages 523-549.
    14. José M. Gaspar, 2018. "A prospective review on New Economic Geography," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 61(2), pages 237-272, September.
    15. Ardeshiri, Mansour & Moghaddasi, Reza & Yazdani, Saeed & Mohamadinejad, Amir, . "Trade Openness and Spatial Distribution of Manufacturing Industries: Iranian Provincial Evidence," Asian Journal of Applied Economics, Kasetsart University, Center for Applied Economics Research, vol. 26(1).
    16. 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.
    17. Commendatore, Pasquale & Kubin, Ingrid & Petraglia, Carmelo & Sushko, Iryna, 2012. "Economic integration and agglomeration in a customs union in the presence of an outside region," Department of Economics Working Paper Series 146, WU Vienna University of Economics and Business.
    18. Olga Alonso-Villar, 2006. "A Reflection On The Effects Of Transport Costs Within The New Economic Geography," Working Papers 57, ECINEQ, Society for the Study of Economic Inequality.
    19. Fabien Candau, 2008. "Good governance, trade and agglomeration," Papers in Regional Science, Wiley Blackwell, vol. 87(4), pages 483-504, November.
    20. Kristian Behrens, 2011. "International Integration And Regional Inequalities: How Important Is National Infrastructure?," Manchester School, University of Manchester, vol. 79(5), pages 952-971, September.

    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)

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:dyncon:v:48:y:2014:i:c:p:265-287. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jedc .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.