Abstract
This paper examines the impact of globalization on interregional and international inequalities in a setup of two countries and four regions, under international mobility of capital. In contrast to the literature, countries and regions are not required to be symmetric. We find that the aforementioned inequalities are closely related to the country size, region size, the degree of globalization (e.g., capital mobility and trade costs) and the level of local infrastructure. In particular, international trade behaves as a dispersion force when capital is internationally mobile for small countries such that reducing domestic transport costs lowers its interregional inequality, but the opposite can be true for large countries or when capital is internationally immobile.
Original language | English |
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Pages (from-to) | 352-361 |
Number of pages | 10 |
Journal | Journal of Urban Economics |
Volume | 67 |
Issue number | 3 |
DOIs | |
Publication status | Published - 2010 May 1 |
Keywords
- Firm location
- Globalization
- Inequality
- Infrastructure
ASJC Scopus subject areas
- Economics and Econometrics
- Urban Studies