Localización, transporte y productividad: aritmética y algebra

Javier Iguiñiz ()

No 1998-146, Documentos de Trabajo / Working Papers from Departamento de Economía - Pontificia Universidad Católica del Perú

Abstract: What kind of forces concentrate industry in the biggest cities? First, using Krugman’s model we illustrate the impact of transport costs in the decision to install a plant in a relatively small city. Then, we introduce the impact of productivity to show that productivity differences would have to be huge in order to justify the installation of a plant in the small city. Given the urban population figures in Peru, the illustrations show that footloose industries will tend to remain in Lima, and will not be created in the provincial cities. The only decentralized industrial alternative is to use local resources and transform them before transporting. To increase competitiveness, this transformation has to reduce the value of the commodity per unit of weight (o in general, unit transport cost).

Pages: 32 pages
Date: 1998
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