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Infrastructure and Industrial Location in LDCs


  • Bjorvatn, K.


Distinguishing between national and international infrastructure, this paper investigates how differences in infrastructure quality may affect the location of firms between countries. The paper employs a model which is particularly well suited for the less-developed-country (LDC) context. The main results are as follows: (i) improvements in international infrastructure stimulates decentralization of industrial activity between countries; (ii) differences in national infrastructure quality make firms locate in the county with the superior national infrastructure; (iii) if a country's overall infrastructure is insufficiently superior, firms may choose to locate in separate countries. In an extension to the model, a formal sector wage premium is introduced. This creates potential market failure, and a role for government intervention.

Suggested Citation

  • Bjorvatn, K., 1999. "Infrastructure and Industrial Location in LDCs," Papers 11/99, Norwegian School of Economics and Business Administration-.
  • Handle: RePEc:fth:norgee:11/99

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    Cited by:

    1. Oludele Akinboade & Pinky Lalthapersad-Pillay, 2009. "The NEPAD initiative and the prospects of business opportunities in the rest of Africa for South African firms based in Gauteng," Development Southern Africa, Taylor & Francis Journals, vol. 26(1), pages 131-155.

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    JEL classification:

    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure


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