Regional integration, international liberalisation and the dynamics of industrial agglomeration

Pasquale Commendatore, Ingrid Kubin (), Carmelo Petraglia and Iryna Sushko

Journal of Economic Dynamics and Control, 2014, vol. 48, issue C, 265-287

Abstract: This paper presents a 3-region footloose-entrepreneur new economic geography model. Two symmetric regions are part of an economically integrated area (the Union), while the third region represents an outside trade partner. We explore how the spatial allocation of industrial production and employment within the Union is affected by changes in two aspects of trade liberalisation, regional integration and globalisation, conditional to the skill endowment and the market size of the outside region. Our main contribution pertains to the analysis of the local and global dynamics of the specified factor mobility process. We show that significant parameter ranges exist for which an asymmetric distribution of economic activities is one of the possible long-run outcomes which may allow a smooth transition to agglomeration (in contrast to the NEG typical catastrophic scenario). In addition, we show that multistability is pervasive and that some attractors are Milnor attractors. Both results reinforce the NEG narrative on the importance of initial conditions for the long-run location of industrial activity.

Keywords: Industrial agglomeration; New economic geography; Footloose entrepreneurs; Local and global dynamics; Bifurcation scenarios (search for similar items in EconPapers)
JEL-codes: C62 F12 F2 R12 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

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Working Paper: Regional integration, international liberalisation and the dynamics of industrial agglomeration (2014)
Working Paper: Regional integration, international liberalisation and the dynamics of industrial agglomeration (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:48:y:2014:i:c:p:265-287

DOI: 10.1016/j.jedc.2014.07.011

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