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Should small countries fear deindustrialization?

Tomasz Michalski () and Ai Ting Goh

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Abstract: Will small countries deindustrialize when opening up to trade with large countries? Davis (1998) shows that for the home market effect to lead to deindustrialization of small countries, trade costs for homogenous goods must be sufficiently smaller than trade costs in differentiated goods, a condition which is not supported by empirical evidence. We show that if differentiated goods production uses tradeable inputs small countries can become deindustrialized when trading with a sufficiently large

Keywords: home market e¤ect; deindustrialization; trade costs; economic geography; intermediate goods (search for similar items in EconPapers)
Date: 2009-03-19
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Published in 2009

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Journal Article: Should Small Countries Fear Deindustrialization? (2010) Downloads
Working Paper: Should small countries fear deindustrialization ? (2010)
Working Paper: Should small countries fear deindustrialization ? (2009) Downloads
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