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Trade integration and regional income disparities in a growth model with the service sector and footloose capital

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  • Katsufumi Fukuda

Abstract

This paper proposes a North–South growth model of endogenous industry location which is consistent with recent empirical work showing that regional income disparities have increased in many countries with the process of trade integration. The model incorporates a service sector that benefits from intersectoral knowledge spillovers from the manufacturing sector. We find that, when these spillovers are local, trade integration leads to an increase in interregional real income inequality.

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  • Katsufumi Fukuda, 2019. "Trade integration and regional income disparities in a growth model with the service sector and footloose capital," Applied Economics Letters, Taylor & Francis Journals, vol. 26(9), pages 722-725, May.
    • Handle: RePEc:taf:apeclt:v:26:y:2019:i:9:p:722-725
    DOI: 10.1080/13504851.2018.1489500
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