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Trade and Spatial Growth: the Nexus that was not missing

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Abstract

Trade leads to an acceleration of economic growth as well as to its spatial concentration. While tradegrowth nexus has been the primary focus in trade analyses, until the recent past spatial growth concentration has received little space there. It appears that the simplifying assumptions of trade models and analyses have become the main stumbling blocks that push spatial growth away from trade theory. It is the rapid change in the shape of the world economy led by trade liberalization and global integration that have created this space to place intra-national economics within the premises of international economics. Spatial growth within trade analyses was, however, not bizarre to trade theory. Bertil Ohlin as well as his teacher, Eli Heckscher ? the coauthors of the Heckscher-Ohlin theory of comparative advantage ? did not miss the point that comparative advantage is based on location-specific factors. The analyses of the locations of production and economic geography seem to have missed the early contribution to the subject by Ohlin and Heckscher who were not confined themselves by the simplifying assumptions of their own trade theory. The paper derives from its literature review that the benefits of agglomeration, the costs of connectivity, the degree of factor mobility, and the size of the markets are essential components that form centripetal forces of spatial growth concentration.

Suggested Citation

  • Sirimal Abeyratne & Nawalage S. Cooray, 2014. "Trade and Spatial Growth: the Nexus that was not missing," Working Papers EMS_2014_04, Research Institute, International University of Japan.
  • Handle: RePEc:iuj:wpaper:ems_2014_04
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    File URL: http://www.iuj.ac.jp/workingpapers/index.cfm?File=EMS_2014_04.pdf
    File Function: First version, 2014
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    More about this item

    Keywords

    Economic geography; International trade; Regional development; Spatial economy;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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