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The Spatial Effects of Trade Openness: A Survey

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  • Marius Brülhart

Abstract

This paper surveys the literature on the implications of trade liberalisation for intra-national economic geographies. Three results stand out. First, neither urban systems models nor new economic geography models imply a robust prediction on the impact of trade openness on spatial concentration. Whether trade promotes concentration or dispersion depends on subtle modelling choices among which it is impossible to adjudicate a priori. Second, empirical evidence mirrors the theoretical indeterminacy: a majority of cross-country studies find no significant effect of openness on urban concentration or regional inequality. Third, the available models predict that, other things equal, regions with inherently less costly access to foreign markets, such as border or port regions, stand to reap the largest gains from trade liberalisation. This prediction is confirmed by the available evidence. Whether trade liberalisation raises or lowers regional inequality therefore depends on each country’s specific geography.

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Paper provided by University of Nottingham, GEP in its series Discussion Papers with number 10/10.

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Handle: RePEc:not:notgep:10/10

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Keywords: trade liberalisation; regional inequality; agglomeration; urban systems;

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Cited by:
  1. Yogi Vidyattama & Maheshwar Rao & Itismita Mohanty & Robert Tanton, 2014. "Modelling the impact of declining Australian terms of trade on the spatial distribution of income," International Journal of Microsimulation, Interational Microsimulation Association, vol. 7(1), pages 100-126.
  2. Brülhart, Marius & Carrère, Céline & Trionfetti, Federico, 2011. "How Wages and Employment Adjust to Trade Liberalization: Quasi-Experimental Evidence from Austria," CEPR Discussion Papers, C.E.P.R. Discussion Papers 8430, C.E.P.R. Discussion Papers.
  3. Ezcurra, Roberto & Rodríguez-Pose, Andrés, 2013. "Does Economic Globalization affect Regional Inequality? A Cross-country Analysis," World Development, Elsevier, Elsevier, vol. 52(C), pages 92-103.
  4. 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, Euro-American Association of Economic Development, vol. 13(2), pages 99-116.
  5. Andr� Sapir, 2011. "European Integration at the Crossroads: A Review Essay on the 50th Anniversary of Bela Balassa's Theory of Economic Integration," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 49(4), pages 1200-1229, December.
  6. Julio Martínez-Galarraga, 2014. "Market potential estimates in history: a survey of methods and an application to Spain, 1867-1930," Working Papers, European Historical Economics Society (EHES) 0051, European Historical Economics Society (EHES).

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