Should small countries fear deindustrialization ?
Tomasz Michalski () and
Ai Ting Goh
No 916, HEC Research Papers Series from HEC Paris
Will small countries deindustrialize when opening up to trade with large countries? Davis(1998) shows that for the home market e¤ect to lead to deindustrialization of small countries, trade costs for homogenous goods must be su¢ ciently smaller than trade costs in di¤erentiated goods, a condition which is not supported by empirical evidence. We show that if di¤erentiated goods production uses tradeable inputs small countries can become deindustrialized when trading with a su¢ ciently large country and if trade costs are low.
Keywords: home market e¤ect; deindustrialization; trade costs; economic geography; intermediate goods (search for similar items in EconPapers)
JEL-codes: F01 R12 (search for similar items in EconPapers)
Pages: 24 pages
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Journal Article: Should Small Countries Fear Deindustrialization? (2010)
Working Paper: Should small countries fear deindustrialization ? (2010)
Working Paper: Should small countries fear deindustrialization? (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:ebg:heccah:0916
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