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Agglomeration and Economic Development: Import Substitution versus Trade Liberalisation

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  • Diego Puga
  • Anthony J. Venables

Abstract

This paper analyses a model of economic development in which international inequalities in the location of industry and income are supported by the agglomeration of industry in a subset of countries. Economic development may not be a gradual process of convergence by all countries, but instead involve countries moving sequentially from the group of poor countries to the group of rich countries. The role of trade policy in promotion industrialization is studied. While both import substitution and unilateral trade liberalisation may be 'successful' in attracting industry, they attract different sectors and welfare levels are higher under trade liberalisation.

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Bibliographic Info

Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0377.

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Date of creation: Nov 1997
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Handle: RePEc:cep:cepdps:dp0377

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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

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  1. Diego Puga, 1996. "The rise and fall of regional inequalities," LSE Research Online Documents on Economics 20643, London School of Economics and Political Science, LSE Library.
  2. Paul Krugman & Anthony J. Venables, 1995. "Globalization and the Inequality of Nations," NBER Working Papers 5098, National Bureau of Economic Research, Inc.
  3. Diego Puga & Anthony J. Venables, 1995. "Preferential Trading Arrangements and Industrial Location," CEP Discussion Papers dp0267, Centre for Economic Performance, LSE.
  4. Murphy, Kevin M. & Shleifer, Andrei & Vishny, Robert W., 1989. "Industrialization and the Big Push," Scholarly Articles 3606235, Harvard University Department of Economics.
  5. Scotchmer, Suzanne & Thisse, Jacques-Francois, 1992. "Space and Competition: A Puzzle," The Annals of Regional Science, Springer, vol. 26(3), pages 269-86, September.
  6. repec:fth:iniesr:430 is not listed on IDEAS
  7. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
  8. Lluch, Constantino & Powell, Alan, 1975. "International comparisons of expenditure patterns," European Economic Review, Elsevier, vol. 6(3), pages 275-303, July.
  9. Syrquin, M. & Chenery, H.B., 1989. "Patterns Of Development, 1950 To 1983," World Bank - Discussion Papers 41, World Bank.
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Cited by:
  1. Abbott, Philip & Bentzen, Jeanet & Huong, Thi Lan & Tarp, Finn, 2007. "A Critical Review of Studies on the Social and Economic Impacts of Vietnam’s International Economic Integration," MPRA Paper 29789, University Library of Munich, Germany.
  2. BEHRENS, Kristian, 2004. "Population growth and manufacturing real wages in 18th century England: a spatial perspective," CORE Discussion Papers 2004025, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).

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