A comprehensive analysis of the economic geography index

The metaphorical introduction of this sector, with its constant returns to scale, serves to guarantee balanced interregional trade. Each of these sectors employs a single and specific factor, which is in fixed supply.

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The earliest travel journals included descriptions of the native peoples, the climate, the landscape, and the productivity of various locations. Paul began to preach a novel sort of spatial economics that his friends called New Economic Geography.

This implies a fall in the nominal wage in region 1, as transport costs and the price index are now lower than in region 2.

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As space is more than a line between two discrete points, and the question is whether the results from the two-region case also hold for many regions. He showed that both consumers and producers would make gains from international trade, as the exploitation of scale economies goes hand in hand with an increase in the number of available varieties: [T]rade needs not be a result of international differences in technology or factor endowments.

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On the contrary, it is emphasized e. These counteract the increasing returns to scale at the firm level.

A comprehensive analysis of the economic geography index

Using historical data, it examines how centers of population and economic activity shift, what patterns of regional specialization and localization evolve over time and what factors explain these changes. McCann, , 59Apart from the different ways, in which reality may get in the way of iceberg cost concepts, the arguments above point to further, more immanent objections. Some of the first traces of the study of spatial aspects of economic activities can be found in seven Chinese maps of the State of Qin dating to the 4th century BC. Since the NTT is now well into its thirties, there are good reasons to ask all of these questions. Moreover, the firms face a rise in nominal wage costs as they compete for workers. It is essentially a trade-to-production ratio that indicates the trade intensity between two regions. Already by the s, there was clear evidence that intrasectoral trade between countries with similar characteristics was growing faster than intersectoral trade between them Grubel and Lloyd,
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Economic geography