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Title: Globalization, Industrial Policy and Clusters

Author(s): Rikard Forslid and Karen-Helene Ulltveit-Moe

Publication Date: January 2002

Keyword(s): economic geography, globalization, industrial clusters and industrial policy

Programme Area(s): International Trade and Regional Economics

Abstract: This Paper analyses industrial policy in a high wage open economy hosting an agglomeration consisting of vertically linked upstream and downstream firms. We show that optimal policy towards upstream industries typically differ from the optimal policy towards downstream industries. Internationalization impacts on the costs as well as on the benefits related to sustaining an industrial agglomeration. Whether maintaining the agglomeration is compatible with a welfare maximizing policy is shown to depend on level of economic integration.

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Bibliographic Reference

Forslid, R and Ulltveit-Moe, K. 2002. 'Globalization, Industrial Policy and Clusters'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=3129