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Integration, Specialization, and the Adjustment

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  • Paul Krugman
  • Anthony Venables

Abstract

In the United States, many industries have a Silicon Valley-type geographic localization. In Europe, these same industries often have four or more major centers of production. This difference is presumably the result of the formal and informal trade barriers that have divided the European market. With the growing integration of that market, however, there is the possibility that Europe will develop an American-style economic geography. This paper uses a theoretical model of industrial localization to demonstrate this possibility, and to show the possible transition costs associated with this shift.

Suggested Citation

  • Paul Krugman & Anthony Venables, 1993. "Integration, Specialization, and the Adjustment," NBER Working Papers 4559, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:4559
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    1. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    2. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
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    Cited by:

    1. Fujita, Masahisa & Krugman, Paul, 1995. "When is the economy monocentric?: von Thunen and Chamberlin unified," Regional Science and Urban Economics, Elsevier, vol. 25(4), pages 505-528, August.
    2. Lionel Fontagné & Michaël Freudenberg & Deniz Ünal, 1995. "Régionalisation et échanges de biens intermédiaires," Working Papers 1995-11, CEPII research center.
    3. Cordes, Alexander & Gehrke, Birgit & Römisch, Roman & Rammer, Christian & Schliessler, Paula & Wassmann, Pia, 2015. "Identifying revealed comparative advantages in an EU regional context," ZEW Expertises, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research, number 145962.
    4. Resmini, Laura, 2006. "Theoretical and Methodological Study on Comparative Advantages in Dynamic Growth Regions, Convergence and Inequalities Patterns," Papers DYNREG03, Economic and Social Research Institute (ESRI).
    5. Wassmann, Pia, 2015. "The Economic Effect of the EU Eastern Enlargement for Border Regions in the Old Member States," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113028, Verein für Socialpolitik / German Economic Association.
    6. Annekatrin Niebuhr, 2008. "The impact of EU enlargement on European border regions," International Journal of Public Policy, Inderscience Enterprises Ltd, vol. 3(3/4), pages 163-186.
    7. Bradley, John & Herce, Jose-Antonio & Modesto, Leonor, 1995. "The macroeconomic effects of the CSF 1994-1999 in the EU periphery : An analysis based on the HERMIN model," Economic Modelling, Elsevier, vol. 12(3), pages 323-333, July.
    8. Yochanan Shachmurove, 2007. "Geography and Industry Meets Venture Capital," PIER Working Paper Archive 07-015, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    9. Hanson, Gordon H, 1996. "Localization Economies, Vertical Organization, and Trade," American Economic Review, American Economic Association, vol. 86(5), pages 1266-1278, December.
    10. Christian LONGHI, 2008. "Empirics Of The Metropolitan Productivity Patterns In Europe," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 27, pages 61-82.
    11. Natacha Gilson, 2006. "How to be Well Shod to Absorb Shocks? Shock Synchronization and Joining the Euro Zone," CESifo Working Paper Series 1878, CESifo Group Munich.
    12. Marco Leonardi, 1997. "Regional Adjustment to Employment Shocks: Italy 1960-1994," Working Papers 16, University of Milano-Bicocca, Department of Economics, revised Sep 1998.
    13. Hartman, Darcy A. & Sheldon, Ian M. & Tweeten, Luther G., 1999. "Location Of Vertically Linked Industries Under Free Trade: Case Studies Of Orange Juice And Tomato Paste In The Western Hemisphere," Working Papers 14580, International Agricultural Trade Research Consortium.
    14. FE, Doukouré Charles, 2010. "Réduction de Droits de Douane et Convergence Réelle dans l'UEMOA
      [Tariffs Reduction and Real Convergence in WAEMU]
      ," MPRA Paper 26763, University Library of Munich, Germany.
    15. Hanson, Gordon H., 1996. "Economic integration, intraindustry trade, and frontier regions," European Economic Review, Elsevier, vol. 40(3-5), pages 941-949, April.
    16. Paolo Giordano & Kun Li, 2012. "An Updated Assessment of the Trade and Poverty Nexus in Latin America," IDB Publications (Working Papers) 79119, Inter-American Development Bank.
    17. Bråthen, Svein & Hervik, Arild, 1997. "Strait crossings and economic development : Developing economic impact assessment by means of ex post analyses," Transport Policy, Elsevier, vol. 4(4), pages 193-200, October.
    18. Bąk Henryk & Maciejewski Sebastian, 2015. "Endogeneity and Specialization in the European Monetary Union," International Journal of Management and Economics, De Gruyter Open, vol. 46(1), pages 7-40, June.
    19. Niebuhr, Annekatrin & Schlitte, Friso, 2008. "EU enlargement and convergence: Does market access matter?," HWWI Research Papers 1-16, Hamburg Institute of International Economics (HWWI).
    20. Karl, Helmut & Matus Velasco, Ximena Fernanda, 2004. "Lessons for regional policy from the new economic geography and the endogenous growth theory," Studies in Spatial Development: Chapters,in: Employment and regional development policy: Market efficiency versus policy intervention, pages 71-89 Akademie für Raumforschung und Landesplanung (ARL) - Leibniz-Forum für Raumwissenschaften.
    21. Fabrizio Erbetta & Luca Agnello, 2001. "The martingales: theoretical and empirical characteristics," CERIS Working Paper 200107, Institute for Economic Research on Firms and Growth - Moncalieri (TO) ITALY -NOW- Research Institute on Sustainable Economic Growth - Moncalieri (TO) ITALY.
    22. Giovanna Segre, 2000. "Foreign Direct Investment and Trade in the EU: Are They Complementary or Substitute in Business Cycles Fluctuations?," CERIS Working Paper 200007, Institute for Economic Research on Firms and Growth - Moncalieri (TO) ITALY -NOW- Research Institute on Sustainable Economic Growth - Moncalieri (TO) ITALY.
    23. Russell Hillberry & David Hummels, 2002. "Explaining Home Bias in Consumption: The Role of Intermediate Input Trade," NBER Working Papers 9020, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F15 - International Economics - - Trade - - - Economic Integration

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