Comparative Advantage and the Location of Production

Rikard Forslid and Ian Wooton ()

No 2118, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We return to a familiar topic in international trade, comparative advantage, introducing it into a model of economic geography. We provide a clear counterexample to the familiar result that trade liberalization leads to increased industrial concentration. Instead, lower trade costs may lead to a dispersion of production. As trade barriers diminish, agglomerative forces weaken, leaving room for other influences on the location 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.

Keywords: Comparative Advantage; Economic Geography; Factor Mobility; International Trade (search for similar items in EconPapers)
JEL-codes: F12 F15 F22 (search for similar items in EconPapers)
Date: 1999-03
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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