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Globalization, Interregional and International Inequalities

  • Dao-Zhi Zeng

    (Graduate School of Management, Kagawa University, Japan)

  • Laixun Zhao

    (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)

This paper examines interregional and international inequalities in a setup of two countries and four regions. Different from the existing literature, countries and regions are not required to be symmetric in size. Capital but not labor is mobile across regions and countries. We find that the interregional and international inequalities are closely related to globalization and the efficiency of local governance. In other words, they are jointly determined by the domestic transport costs (e.g., infrastructure, administrative barriers, etc) in the two countries and the international trade cost. Particularly, the interregional inequality may be either a monotonically increasing or an inverted U-curve function of its own domestic transport costs. Also, the interregional inequality decreases with the national manufacturing share. These results shed light on the so-called "deindustrialization"phenomenon.

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File URL: http://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/dp209.pdf
File Function: First version, 2007
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Paper provided by Research Institute for Economics & Business Administration, Kobe University in its series Discussion Paper Series with number 209.

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Length: 27 pages
Date of creation: Nov 2007
Date of revision:
Handle: RePEc:kob:dpaper:209
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