Infrastructure and Industrial Location in LDCs

Kjetil Bjorvatn

Working Papers from Norwegian School of Economics and Business Administration-

Abstract: Distinguishing between national and international infrastructure, this paper investigates how differences in infrastructure quality may affect the location of firms between countries. The paper employs a model which is particularly well suited for the less-developed-country (LDC) context. The main results are as follows: (i) improvements in international infrastructure stimulates decentralization of industrial activity between countries; (ii) differences in national infrastructure quality make firms locate in the county with the superior national infrastructure; (iii) if a country's overall infrastructure is insufficiently superior, firms may choose to locate in separate countries. In an extension to the model, a formal sector wage premium is introduced. This creates potential market failure, and a role for government intervention.

Keywords: ECONOMIC INTEGRATION; TRADE; ECONOMIC DEVELOPMENT (search for similar items in EconPapers)
JEL-codes: O14 O17 O18 (search for similar items in EconPapers)
Pages: 14 pages
Date: 1999
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:fth:norgee:11/99

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