Working Paper: CEPR ID: DP3079
Authors: Nicholas Crafts; Anthony J. Venables
Abstract: This Paper argues that a geographical perspective is fundamental to understanding comparative economic development in the context of globalization. Central to this view is the role of agglomeration in productivity performance; size and location matter. The tools of the new economic geography are used to illuminate important episodes when the relative position of major economies radically changed: the rise of the United States at the beginning and of East Asia at the end of the 20th century. It is suggested that while lack of high quality institutions has been a major reason for falling behind geographic disadvantages also merit attention.
Keywords: Economic Geography; Economic History; Globalization
JEL Codes: F10; N10; N70
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| reduced transport costs (R49) | increased economic concentration in certain regions (R11) |
| falling trade costs (F12) | regions with better market access attract more manufacturing activity (R32) |
| increased manufacturing activity (L60) | wage increases (J38) |
| wage increases (J38) | further agglomeration (R11) |
| ability to exploit economies of scale and agglomeration effects (R32) | rise of the United States as a leading industrial power (N11) |
| declining transport costs (R41) | ability to exploit economies of scale and agglomeration effects (R32) |
| geographical advantages (R12) | cumulative causation processes that exacerbate regional disparities (R11) |
| improved transport technologies (R42) | urbanization (R11) |
| improved transport technologies (R42) | growth of cities and industrial clusters (R11) |