Good governance, trade and agglomeration*

Fabien Candau ()

Papers in Regional Science, 2008, vol. 87, issue 4, 483-504

Abstract: Abstract This article presents a model for developing countries that investigates the factors behind agglomeration of activities in urban giants. First we show that market access to external demand tends to attract entrepreneurs. Second we find that the attractive power of the urban giant can be linked to a lack of democracy, in the sense that by reversing the cost of living effect, democracy allows the reduction in spatial inequality and then the tendency of agglomeration. Finally we analyse how the funds embezzled by a corrupt government vary according to internal and external trade liberalisation. We show that a decrease in the disadvantage of the periphery to trade with the external market can limit the funds embezzled under bad governance. Resumen Este artículo presenta un modelo para países en desarrollo que investiga los factores que rigen la aglomeración de actividades en gigantes urbanos. Primero mostramos que el acceso del mercado a la demanda externa tiende a atraer a emprendedores. A continuación encontramos que el poder de atracción de un gigante urbano puede vincularse a una falta de democracia, en el sentido en que invirtiendo el efecto del costo de la vida, la democracia permite la reducción en la desigualdad espacial y con ello la tendencia a la aglomeración. Finalmente, analizamos como varía la malversación de fondos por gobiernos corruptos dependiendo de la liberalización interna y externa del comercio. Mostramos que una disminución en la desventaja de la periferia para comerciar con el mercado externo puede limitar la malversación de fondos durante un mal gobierno.

Date: 2008
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Citations: View citations in EconPapers (8)

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https://doi.org/10.1111/j.1435-5957.2008.00169.x

Related works:
Working Paper: Good Governance, Trade and Agglomeration (2008)
Working Paper: Good Governance, Trade and Agglomeration (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:bla:presci:v:87:y:2008:i:4:p:483-504

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