Political Participation, Regional Policy and the Location of Industry

Magnus Wiberg ()
Additional contact information
Magnus Wiberg: Ministry of finance, Postal: Swedish Government Offices, SE-103 33 Stockholm, Sweden

No 2010:5, Research Papers in Economics from Stockholm University, Department of Economics

Abstract: This paper analyzes the location of manufacturing activities when regional policy is determined by each region’s relative propensity to vote. Once voting over government transfers to regions is included in an economic geography framework with size asymmetries, the standard prediction that the larger region becomes the core when trade barriers are reduced no longer holds. The establishment of manufacturing production in the economically smaller region is increasing in the level of regional integration. As trade is increasingly liberalized, the economy eventually features a reversed core-periphery equilibrium where all firms reside in the South. It is further shown that the relative political participation rate increases in the factor scarce region as trade is liberalized. Empirical evidence shows that the model is consistent with qualitative features of the data.

Keywords: Economic Geography; Regional Policy; Voter Turnout (search for similar items in EconPapers)
JEL-codes: D72 F12 R12 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2010-04-14
New Economics Papers: this item is included in nep-cdm, nep-geo, nep-pol and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations:

Forthcoming as Wiberg, Magnus, 'Political Participation, Regional Policy and the Location of Industry' in Regional Science and Urban Economics, 2011, pages 11.

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Persistent link: https://EconPapers.repec.org/RePEc:hhs:sunrpe:2010_0005

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