Comparative advantage and the location of production

R. Forslid, I. Wooton

Research output: Contribution to journalArticle

27 Citations (Scopus)

Abstract

The paper returns to a familiar topic in international trade, comparative advantage, introducing it into Krugman's classic, core-periphery model of economic geography. This extra force of dispersion radically changes the stability properties of the model. Instead of the familiar result that trade liberalization leads to increased industrial concentration, lowering trade costs leads initially to increased concentration and then to dispersion of production. When a pattern of comparative advantage exists, integration may lead to international specialization of production. This may be good news for peripheral countries, which may be able to retain industry despite the attraction of the core.
Original languageEnglish
Pages (from-to)588-603
Number of pages15
JournalReview of International Economics
Volume11
Issue number4
DOIs
Publication statusPublished - 2003

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Keywords

  • economic production
  • economics
  • competition
  • international economics
  • trade

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