DP6049 Industry Reallocations in a Globalizing Economy

Author(s): Kristian Behrens, Giordano Mion, Gianmarco Ottaviano
Publication Date: January 2007
Keyword(s): economic geography, firm heterogeneity, international integration, multinationals, resource reallocation
JEL(s): F12
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=6049

We distill the main insights from recent trade models on firms' responses to globalisation. Our primary aim is to assess the economic impact and the welfare implications of the resulting reallocation of resources across firms and countries. In so doing, we bring theory into life through the numerical implementation of a theoretical framework calibrated on European data, which encompasses aspects of economic geography, firm heterogeneity, and firms' organizational choices. Our final purpose is to provide a comprehensive background for empirical investigations and to stimulate further theoretical research.