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Globalization, Interregional and International Inequalities

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  • Dao-Zhi Zeng

    (Graduate School of Management, Kagawa University, Japan)

  • Laixun Zhao

    (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)

Abstract

This paper examines interregional and international inequalities in a setup of two countries and four regions. Different from the existing literature, countries and regions are not required to be symmetric in size. Capital but not labor is mobile across regions and countries. We find that the interregional and international inequalities are closely related to globalization and the efficiency of local governance. In other words, they are jointly determined by the domestic transport costs (e.g., infrastructure, administrative barriers, etc) in the two countries and the international trade cost. Particularly, the interregional inequality may be either a monotonically increasing or an inverted U-curve function of its own domestic transport costs. Also, the interregional inequality decreases with the national manufacturing share. These results shed light on the so-called "deindustrialization"phenomenon.

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File URL: http://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/dp209.pdf
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Bibliographic Info

Paper provided by Research Institute for Economics & Business Administration, Kobe University in its series Discussion Paper Series with number 209.

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Length: 27 pages
Date of creation: Nov 2007
Date of revision:
Handle: RePEc:kob:dpaper:209

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Keywords: Regional Inequality; Firm Location; Infrastructure; Governance; Deindustrialization;

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Citations

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Cited by:
  1. Toshiaki Takahashi & Hajime Takatsuka & Dao-Zhi Zeng, 2013. "Spatial inequality, globalization, and footloose capital," Economic Theory, Springer, vol. 53(1), pages 213-238, May.
  2. Stark, Oded & Rendl, Franz & Jakubek, Marcin, 2011. "The merger of populations, the incidence of marriages, and aggregate unhappiness," Discussion Papers 109968, University of Bonn, Center for Development Research (ZEF).
  3. Xi Yang & Nobuaki Hamaguchi, 2013. "Trade infrastructure and firm location under Cournot competition," The Annals of Regional Science, Springer, vol. 50(1), pages 153-167, February.
  4. Lessmann, Christian, 2014. "Spatial inequality and development — Is there an inverted-U relationship?," Journal of Development Economics, Elsevier, vol. 106(C), pages 35-51.

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