Resource-based cities and the Dutch disease

Hajime Takatsuka, Dao-Zhi Zeng () and Laixun Zhao

Resource and Energy Economics, 2015, vol. 40, issue C, 57-84

Abstract: This paper examines the relationship between resource development and industrialization. When transport costs are high, the region with a more valuable natural resource enjoys a higher welfare than the other region. However, as transport costs decrease, firms begin to move out of the region, causing the Dutch disease to occur, initially in terms of industry share, and eventually in terms of welfare too when transport is sufficiently free. A resource boom in intermediate inputs may strengthen the tendency for manufacturing agglomeration in the same region, but a resource boom in consumption inputs will weaken this tendency. The model thus provides insight for cities to utilize their limited resources efficiently.

Keywords: Resource-based cities; Dutch disease; Resource goods; Industrialization; Transport costs (search for similar items in EconPapers)
JEL-codes: F1 Q2 R1 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:resene:v:40:y:2015:i:c:p:57-84

DOI: 10.1016/j.reseneeco.2015.01.003

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