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Regional Integration, Trade, and Migration: Are Demand Linkages Relevant in Europe?

  • Rodney D. Ludema

    (Georgetown University)

  • Ian Wooton

    (University of Glasgow)

We examine the consequences of increased economic integration between nations within a region. We adopt Krugman’s economic-geography model in which demand linkages can generate agglomeration of manufacturing activity. Manufacturing labour is assumed to be imperfectly mobile between countries. This constrains the forces of agglomeration within the region and suggests that the model may be applicable to Europe. We show that trade liberalisation may lead initially to partial agglomeration, then a re-industrialisation of the periphery. This argues in favour of a sequential approach to integration, with trade barriers being eliminated prior to a reduction in impediments to factor mobility.

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Paper provided by EconWPA in its series International Trade with number 9802001.

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Length: 25 pages
Date of creation: 02 Feb 1998
Date of revision:
Handle: RePEc:wpa:wuwpit:9802001
Note: Type of Document - MS Word; prepared on IBM PC; to print on HP; pages: 25 ; figures: included
Contact details of provider: Web page: http://128.118.178.162

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  1. Ludema, Rodney D. & Wooton, Ian, 2000. "Economic geography and the fiscal effects of regional integration," Journal of International Economics, Elsevier, vol. 52(2), pages 331-357, December.
  2. Paul Krugman, 1990. "Increasing Returns and Economic Geography," NBER Working Papers 3275, National Bureau of Economic Research, Inc.
  3. Paul Krugman & Anthony J. Venables, 1995. "Globalization and the Inequality of Nations," NBER Working Papers 5098, National Bureau of Economic Research, Inc.
  4. Faini, Riccardo, 1996. "Increasing returns, migrations and convergence," Journal of Development Economics, Elsevier, vol. 49(1), pages 121-136, April.
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