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Infrastructure and Industrial Location in LDCs

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Author Info

  • Bjorvatn, K.

Abstract

Distinguishing between national and international infrastructure, this paper investigates how differences in infrastructure quality may affect the location of firms between countries. The paper employs a model which is particularly well suited for the less-developed-country (LDC) context. The main results are as follows: (i) improvements in international infrastructure stimulates decentralization of industrial activity between countries; (ii) differences in national infrastructure quality make firms locate in the county with the superior national infrastructure; (iii) if a country's overall infrastructure is insufficiently superior, firms may choose to locate in separate countries. In an extension to the model, a formal sector wage premium is introduced. This creates potential market failure, and a role for government intervention.

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Bibliographic Info

Paper provided by Norwegian School of Economics and Business Administration- in its series Papers with number 11/99.

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Length: 14 pages
Date of creation: 1999
Date of revision:
Handle: RePEc:fth:norgee:11/99

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Keywords: ECONOMIC INTEGRATION ; TRADE ; ECONOMIC DEVELOPMENT;

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