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The effects of globalization on regional inequality in a model of semi-endogenous growth and footloose capital

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  • Katsufumi Fukuda

Abstract

We show that manufacturing firms tend to locate only in northern regions when transportation costs are not high, and in both northern and southern regions when transportation costs are high. We made this determination through the use of a semi-endogenous research and development growth model that reflects international trade, footloose capital, and local knowledge spillover. Regional income inequality—defined here as differences in per-capita expenditure relative to the price index—decreases in the former scenario following globalization, as the northern share of expenditure does not change. This lack of change stems from there being a constant and exogenous growth rate. Additionally, the northern price index does not change, even as the southern price index decreases.

Suggested Citation

  • Katsufumi Fukuda, 2017. "The effects of globalization on regional inequality in a model of semi-endogenous growth and footloose capital," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 24(1-2), pages 95-105, April.
    • Handle: RePEc:taf:raaexx:v:24:y:2017:i:1-2:p:95-105
    DOI: 10.1080/16081625.2015.1062243
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    Cited by:

    1. Steven Bond-Smith, 2021. "The unintended consequences of increasing returns to scale in geographical economics [Investing for prosperity: skills, infrastructure and innovation]," Journal of Economic Geography, Oxford University Press, vol. 21(5), pages 653-681.
    2. Fukuda, Katsufumi & Ouchida, Yasunori, 2020. "Corporate social responsibility (CSR) and the environment: Does CSR increase emissions?," Energy Economics, Elsevier, vol. 92(C).

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