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Globalisation and the Spatial Concentration of Production

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  • Friederike Niepmann
  • Gabriel J. Felbermayr

Abstract

(1240) Friederike Niepmann and Gabriel J. Felbermayr In new trade theory (NTT) models, freer trade tends to increase the spatial concentration of industrial production across countries. While nations with large home markets and central geographical location become increasingly attractive business locations, small peripheral countries gradually deindustrialise. Using data for 26 industries, 20 OECD countries and 20 years, we investigate the empirical validity of this claim. Separating out the role of home market size from geographical factors, and using various panel methods, we find robust evidence in line with theory. Freer trade has indeed magnified the importance of domestic demand and geographical location for the pattern of industrial production across the globe and has therefore exacerbated spatial disparities.

Suggested Citation

  • Friederike Niepmann & Gabriel J. Felbermayr, 2010. "Globalisation and the Spatial Concentration of Production," The World Economy, Wiley Blackwell, vol. 33(5), pages 680-709, May.
  • Handle: RePEc:bla:worlde:v:33:y:2010:i:5:p:680-709
    DOI: 10.1111/j.1467-9701.2010.01240.x
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    Cited by:

    1. Kaitila, Ville, 2013. "Specialisation and/or Convergence: Structure of European Exports and Production," ETLA Working Papers 12, The Research Institute of the Finnish Economy.
    2. Lovely, Mary E. & Liang, Yang & Zhang, Hongsheng, 2019. "Economic geography and inequality in China: Did improved market access widen spatial wage differences?," China Economic Review, Elsevier, vol. 54(C), pages 306-323.
    3. Gianluca Cafiso, 2012. "Sectoral Trade Freeness and Agglomeration in the EU: An Empirical Test Strategy," CESifo Working Paper Series 4000, CESifo.
    4. Nelly Exbrayat, 2016. "Does trade liberalization trigger tax competition? Theory and evidence from OECD countries," Working Papers 1620, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    5. Baldwin, Richard, 2012. "Global supply chains: Why they emerged, why they matter, and where they are going," CEPR Discussion Papers 9103, C.E.P.R. Discussion Papers.
    6. Gianluca Cafiso, 2015. "Sectoral trade freeness and agglomeration in the EU: an empirical test approach," Empirical Economics, Springer, vol. 48(2), pages 779-805, March.
    7. Fariha Kamal & Mary E. Lovely & Puman Ouyang, 2017. "Does deeper integration enhance spatial advantages? Market access and wage growth in China," World Scientific Book Chapters, in: Mary E Lovely (ed.), International Economic Integration and Domestic Performance, chapter 14, pages 255-270, World Scientific Publishing Co. Pte. Ltd..
    8. Nelly Exbrayat, 2016. "Does trade liberalization trigger tax competition? Theory and evidence from OECD countries," Working Papers halshs-01328769, HAL.
    9. Colin Davis & Ken‐ichi Hashimoto, 2018. "Corporate Tax Policy And Industry Location With Fully Endogenous Productivity Growth," Economic Inquiry, Western Economic Association International, vol. 56(2), pages 1136-1148, April.

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    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F15 - International Economics - - Trade - - - Economic Integration

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