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Comparative Advantage and the Location of Production
Article first published online: 16 SEP 2003
DOI: 10.1111/1467-9396.00405
1467-9396/asset/cover.gif?v=1&s=98eef74c96a9efb1640b9d25df2d23f004e49bf9 "Review of International Economics")
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How to Cite
Forslid, R. and Wooton, I. (2003), Comparative Advantage and the Location of Production. Review of International Economics, 11: 588–603. doi: 10.1111/1467-9396.00405
Publication History
- Issue published online: 16 SEP 2003
- Article first published online: 16 SEP 2003
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Abstract
The paper returns to a familiar topic in international trade, comparative advantage, introducing it into Krugman's classic, core–periphery model of economic geography. This extra force of dispersion radically changes the stability properties of the model. Instead of the familiar result that trade liberalization leads to increased industrial concentration, lowering trade costs leads initially to increased concentration and then to dispersion of production. When a pattern of comparative advantage exists, integration may lead to international specialization of production. This may be good news for peripheral countries, which may be able to retain industry despite the attraction of the core.