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Regional Integration and Industrial Location in a Landlocked Spatial Economy

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Author Info
Hemanta Shrestha (AT&T)
Dennis Heffley (University of Connecticut)

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Abstract

Regional integration proposals often require agreements between countries that differ in geographic size, resource endowments, transportation assets, technologies, and product quality. In this asymmetric setting, questions arise about the potential for mutual gains and the distribution of benefits among industries and workers in each country. This paper examines how regional integration between a small landlocked country and a large neighboring country--with a unique port facility that both nations must use to export goods--affects the wage and location decisions of firms, the allocation of labor, the welfare of each country’s workers and firms, and aggregate measures of economic welfare in each country and the region. A simulated spatial labor market model is used to explore the economic effects of various stages of regional integration. Beginning with autarky as a benchmark case, we consider two forms of regional integration: partial mobility (mobile labor with geographically restricted firms); and full mobility (mobile labor and firms) with convergence of production technologies and product quality.

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File URL: http://www.econ.uconn.edu/working/2003-07.pdf
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Publisher Info
Paper provided by University of Connecticut, Department of Economics in its series Working papers with number 2003-07.

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Length: 44 pages
Date of creation: Mar 2003
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Handle: RePEc:uct:uconnp:2003-07

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Keywords: regional integration spatial location migration labor

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  13. Benson, Bruce L. & Hartigan, James C., 1983. "Tariffs which lower price in the restricting country : An analysis of spatial markets," Journal of International Economics, Elsevier, vol. 15(1-2), pages 117-133, August. [Downloadable!] (restricted)
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