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Good Governance, Trade and Agglomeration

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  • Candau, Fabien
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    Abstract

    We develop a model for developing countries that investigates the factors behind agglomeration of activities in urban giants. Firstly we show that relatively easier market access to external demand provided by the urban giant tends to attract entrepreneurs to this place. Secondly we find that the attractive power of the urban giant can be linked to a lack of democracy. Indeed we demonstrate that democracy acts as a dispersive force in the sense that by reversing the cost of living effect, it allows to reduce the spatial inequality and then the tendency of agglomeration. Lastly we analyse how the funds embezzled by a bad government vary according to internal and external trade liberalisation. We show that a decrease in the disadvantage of the periphery to trade with the external market can limit the funds embezzled by a Leviathan.

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    Bibliographic Info

    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 2353.

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    Date of creation: 31 May 2006
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    Handle: RePEc:pra:mprapa:2353

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    Keywords: Economic geography; Cities; Trade; Corruption;

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    1. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August.
    2. Elisenda Paluzie Hernandez, 1999. "Trade policy and regional inequalities," Working Papers in Economics 48, Universitat de Barcelona. Espai de Recerca en Economia.
    3. Marius BRÜLHART & Matthieu CROZET & Pamina KOENIG, 2004. "Enlargement and the EU Periphery: The Impact of Changing Market Potential," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 04.02, Université de Lausanne, Faculté des HEC, DEEP.
    4. Murata, Yasusada & Thisse, Jacques-François, 2005. "A Simple Model of Economic Geography à la Helpman-Tabuchi," CEPR Discussion Papers 4936, C.E.P.R. Discussion Papers.
    5. CHARLOT, Sylvie & GAIGNE, Carl & ROBERT-Nicoud, Frederic & THISSE, Jacques-François, . "Agglomeration and welfare: the core-periphery model in the light of Bentham, Kaldor, and Rawls," CORE Discussion Papers RP -1857, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    6. Rikard Forslid & Gianmarco I.P. Ottaviano, 2003. "An analytically solvable core-periphery model," Journal of Economic Geography, Oxford University Press, vol. 3(3), pages 229-240, July.
    7. Crozet, Matthieu & Koenig Soubeyran, Pamina, 2004. "EU enlargement and the internal geography of countries," Journal of Comparative Economics, Elsevier, vol. 32(2), pages 265-279, June.
    8. Paul Krugman, 1990. "Increasing Returns and Economic Geography," NBER Working Papers 3275, National Bureau of Economic Research, Inc.
    9. Author-Name: Jeffrey D. Sachs & John W. McArthur & Guido Schmidt-Traub & Margaret Kruk & Chandrika Bahadur & Michael Faye & Gordon McCord, 2004. "Ending Africa's Poverty Trap," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 35(1), pages 117-240.
    10. Forslid, Rikard & Haaland, Jan I. & Ulltveit-Moe, Karen-Helene, 1999. "A U-Shaped Europe? A Simulation Study of Industrial Location," CEPR Discussion Papers 2247, C.E.P.R. Discussion Papers.
    11. Krugman, Paul & Elizondo, Raul Livas, 1996. "Trade policy and the Third World metropolis," Journal of Development Economics, Elsevier, vol. 49(1), pages 137-150, April.
    12. Tabuchi, Takatoshi, 1998. "Urban Agglomeration and Dispersion: A Synthesis of Alonso and Krugman," Journal of Urban Economics, Elsevier, vol. 44(3), pages 333-351, November.
    13. Mauro, Paolo, 1998. "Corruption and the composition of government expenditure," Journal of Public Economics, Elsevier, vol. 69(2), pages 263-279, June.
    14. Erwin Tiongson & Hamid Reza Davoodi & Sanjeev Gupta, 2000. "Corruption and the Provision of Health Care and Education Services," IMF Working Papers 00/116, International Monetary Fund.
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