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The Spread of Industry: Spatial Agglomeration in Economic Development

  • Puga, Diego
  • Venables, Anthony J.

This paper describes the spread of industry from country to country as a region grows. All industrial sectors are initially agglomerated in one country, tied together by input-output links between firms. Growth expands industry more than other sectors, bidding up wages in the country in which industry is clustered. At some point some firms start to move away, and when a critical mass is reached industry expands in another country, raising wages there. We establish the circumstance sin which industry spill over, which sectors move out first, and which are more important in triggering a critical mass.

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File URL: http://www.sciencedirect.com/science/article/B6WMC-45MFXVY-6/2/27a8d94ff869da00b44e95eb11576aac
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Article provided by Elsevier in its journal Journal of the Japanese and International Economies.

Volume (Year): 10 (1996)
Issue (Month): 4 (December)
Pages: 440-464

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Handle: RePEc:eee:jjieco:v:10:y:1996:i:4:p:440-464
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622903

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  1. Paul Krugman & Anthony J. Venables, 1995. "Globalization and the Inequality of Nations," NBER Working Papers 5098, National Bureau of Economic Research, Inc.
  2. Young, Alwyn, 1995. "The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 641-80, August.
  3. Venables, Anthony J, 1996. "Equilibrium Locations of Vertically Linked Industries," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(2), pages 341-59, May.
  4. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
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