Appendix 4 : Relocation : What Matters ? Competition or/and Co-ordination
AbstractWith respect to relocation (delocalisation) issues two attitudes can be contrasted. According to the most standard one, relocation does not create any problem when full competition prevails in product, labour, and capital markets. Changes in transportation and production costs may generate changes in location by firms in manufacturing industry at the benefit of less developed countries. In more developed countries, jobs are shifting from e.g. manufacturing to services industry, and the negative impact on households’ purchasing power of lower nominal wages, if any, will be more than offset by lower prices of imported final goods. Unemployment will be frictional and temporary, unless market labour rigidities prevent the necessary jobs’ shifting. According to a different perspective, relocation may become a real issue when considering it as an aspect of a process of creative destruction that necessarily results in local distortions in the structure of productive capacity and hence in market disequilibria. In the latter perspective, relocation can no longer be viewed as an equilibrium phenomenon. It may be associated with an increasing rate of unemployment and make it necessary for public authorities to intervene. In fact, all depends on the way co-ordination issues are dealt with. But focusing on attractiveness and competitiveness of territories may lead public authorities to implicitly consider international trade as a zero (or negative) sum game and implement supply side oriented policies that are fundamentally misconceived and could increase market disequilibria. Thus it is necessary to consider how production location really takes place out of equilibrium and how relocation may end in a quasi-dynamic equilibrium. Public interventions are required, which consist in combining structural and macroeconomic policies, the former being efficient only if the latter are growth oriented. The aim of this paper is precisely to argue according to the latter perspective.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Sciences Po in its series Sciences Po publications with number info:hdl:2441/5062.
Date of creation: Mar 2005
Date of revision:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Francesco Saraceno, 2005. "Demand Shocks and Intertemporal Coordination: A Two Country Model," The IUP Journal of Monetary Economics, IUP Publications, vol. 0(2), pages 51 - 75, May.
- Paul Krugman & Anthony J. Venables, 1995.
"Globalization and the Inequality of Nations,"
NBER Working Papers
5098, National Bureau of Economic Research, Inc.
- Krugman, Paul & Venables, Anthony J., 1994. "Globalization and the Inequality of Nations," CEPR Discussion Papers 1015, C.E.P.R. Discussion Papers.
- Krugman, Paul & Venables, Anthony J., 1995. "Globalization and the Inequality of Nations," Working Paper Series 430, Research Institute of Industrial Economics.
- Martin, Philippe & Ottaviano, Gianmarco Ireo Paolo, 1996.
"Growing Locations: Industry Location in a Model of Endogenous Growth,"
CEPR Discussion Papers
1523, C.E.P.R. Discussion Papers.
- Martin, Philippe & I.P. Ottaviano, Gianmarco, 1999. "Growing locations: Industry location in a model of endogenous growth," European Economic Review, Elsevier, vol. 43(2), pages 281-302, February.
- Lucas, Robert E, Jr, 1993.
"Making a Miracle,"
Econometric Society, vol. 61(2), pages 251-72, March.
- Devereux, Michael B & Head, Allen C & Lapham, Beverly J, 1996. "Monopolistic Competition, Increasing Returns, and the Effects of Government Spending," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(2), pages 233-54, May.
- Amendola, Mario & Gaffard, Jean-Luc, 1998. "Out of Equilibrium," OUP Catalogue, Oxford University Press, number 9780198293804.
- repec:fth:iniesr:430 is not listed on IDEAS
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Spire @ Sciences Po Library).
If references are entirely missing, you can add them using this form.