Citation

Discussion Paper Details

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Title: Comparative Advantage and the Location of Production

Author(s): Rikard Forslid and Ian Wooton

Publication Date: March 1999

Keyword(s): Comparative Advantage, Economic Geography, Factor Mobility and International Trade

Programme Area(s): International Trade and Regional Economics

Abstract: We return to a familiar topic in international trade, comparative advantage, introducing it into a model of economic geography. We provide a clear counterexample to the familiar result that trade liberalization leads to increased industrial concentration. Instead, lower trade costs may lead to a dispersion of production. As trade barriers diminish, agglomerative forces weaken, leaving room for other influences on the location 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.

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Bibliographic Reference

Forslid, R and Wooton, I. 1999. 'Comparative Advantage and the Location of Production'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=2118