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Geographical Disadvantage: A Heckscher-Ohlin-Von Thunen model of International Specialization

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  • Limão, Nuno
  • Venables, Anthony J

Abstract

We analyze the trade and production patterns of countries located at varying distances from an economic centre. Exports and imports of final and intermediate goods bear transport costs that increase with distance. We show how production and trade depend both on factor endowments and factor intensities, and on distance and the transport intensities of different goods. Countries divide into zones with different trade patterns, some export oriented and others import substituting. We study the implications of distance for factor prices and real incomes, the effects of changes in transport costs, and the locational choice of new activities.

Suggested Citation

  • Limão, Nuno & Venables, Anthony J, 1999. "Geographical Disadvantage: A Heckscher-Ohlin-Von Thunen model of International Specialization," CEPR Discussion Papers 2305, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:2305
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    1. Leamer, Edward E. & Levinsohn, James, 1995. "International trade theory: The evidence," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 26, pages 1339-1394, Elsevier.
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    4. Masahisa Fujita & Paul Krugman & Anthony J. Venables, 2001. "The Spatial Economy: Cities, Regions, and International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262561476, February.
    5. John Luke Gallup & Jeffrey D. Sachs & Andrew D. Mellinger, 1999. "Geography and Economic Development," International Regional Science Review, , vol. 22(2), pages 179-232, August.
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    7. John Luke Gallup & Jeffrey D. Sachs & Andrew Mellinger, 1999. "Geography and Economic Development," CID Working Papers 1, Center for International Development at Harvard University.
    8. Gallup, John L. & Sachs, Jeffrey D. & Mellinger, Andrew, "undated". "Geography and Economic Development," Instructional Stata datasets for econometrics geodata, Boston College Department of Economics.
    9. Limao, Nuno & Venables, Anthony J., 1999. "Infrastructure, geographical disadvantage, and transport costs," Policy Research Working Paper Series 2257, The World Bank.
    10. Samuelson, Paul A, 1983. "Thunen at Two Hundred," Journal of Economic Literature, American Economic Association, vol. 21(4), pages 1468-1488, December.
    11. John Luke Gallup & Jeffrey D. Sachs & Andrew D. Mellinger, 1998. "Geography and Economic Development," NBER Working Papers 6849, National Bureau of Economic Research, Inc.
    12. Gallup, John & Sachs, Jeffrey, 1999. "Geography and Economic Development," Harvard Institute for International Development (HIID) Papers 294434, Harvard University, Kennedy School of Government.
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    More about this item

    Keywords

    Specialization; Trade; Transport Costs;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General

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