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The core and periphery of the world economy

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  • Jarko Fidrmuc

Abstract

This paper reviews three models of foreign trade, including the Heckscher-Ohlin model, the new trade theory based on increasing returns to scale, and the model of economic geography and trade with agglomeration effects. It demonstrates that gravity models perform relatively well for differentiated and non-differentiated products. This result supports Hummels' and Levinsohn's (1995) critique of the new theory foundation of the gravity equation. Furthermore, the bilateral trade relations of peripheral countries are often identified as outliers. This pattern of outliers is consistent with the model of geography and trade.

Suggested Citation

  • Jarko Fidrmuc, 2004. "The core and periphery of the world economy," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 13(1), pages 89-106.
  • Handle: RePEc:taf:jitecd:v:13:y:2004:i:1:p:89-106
    DOI: 10.1080/0963819042000213552
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    References listed on IDEAS

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    1. Redding, Stephen & Venables, Anthony J., 2004. "Economic geography and international inequality," Journal of International Economics, Elsevier, vol. 62(1), pages 53-82, January.
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    Cited by:

    1. Pinilla, Vicente & Serrano, Raúl, 2008. "The Agricultural and Food Trade in the First Globalization: Spanish Table Wine Exports 1871 to 1935 – A Case Study," Journal of Wine Economics, Cambridge University Press, vol. 3(02), pages 132-148, December.
    2. Raú l Serrano & Vicente Pinilla, 2012. "The long-run decline in the share of agricultural and food products in international trade: a gravity equation approach to its causes," Applied Economics, Taylor & Francis Journals, vol. 44(32), pages 4199-4210, November.
    3. Schnatz, Bernd & Bussière, Matthieu & Fidrmuc, Jarko, 2005. "Trade integration of Central and Eastern European countries: lessons from a gravity model," Working Paper Series 545, European Central Bank.
    4. Vicent Pinilla & Raúl Serrano, 2010. "The long-run decline in the share of agricultural and food products in international trade, 1951-2000: a gravity equation approach of its causes," Documentos de Trabajo de la Sociedad Española de Historia Agraria 1002, Sociedad Española de Historia Agraria.
    5. Crespo Cuaresma & Hlouskova & Obersteiner, 2008. "Natural Disasters As Creative Destruction? Evidence From Developing Countries," Economic Inquiry, Western Economic Association International, vol. 46(2), pages 214-226, April.
    6. Schnatz, Bernd & Bussière, Matthieu & Fidrmuc, Jarko, 2005. "Trade integration of Central and Eastern European countries: lessons from a gravity model," Working Paper Series 545, European Central Bank.
    7. Simone Juhasz Silva & Douglas Nelson, 2012. "Does Aid Cause Trade? Evidence from an Asymmetric Gravity Model," The World Economy, Wiley Blackwell, vol. 35(5), pages 545-577, May.

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