Lumpy Countries, Urbanization, and Trade

29 Pages Posted: 14 Dec 2011

See all articles by Steven Brakman

Steven Brakman

University of Groningen - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Charles van Marrewijk

Utrecht University - School of Economics

Date Written: December 14, 2011

Abstract

Lumpiness of production factors within a country might overturn the predictions for the structure of trade by the factor-abundance (HO) model. Trade patterns, as predicted by this model, can both be magnified or reversed by uneven concentration of production factors within a country. Cities are the most characteristic manifestation of lumpiness of production factors and as a consequence different patterns of urbanization between countries might cause trade patterns to differ from HO predictions on the basis of the overall availability of production factors. We argue that urbanization indeed affects trade patterns. The consequence of this result is that urbanization should be included in empirical trade analysis; urbanization could, e.g. to the understanding of the ‘missing trade’ puzzle.

Keywords: Heckscher-Ohlin, factor endowments, agglomeration, geographical economics

JEL Classification: F110, F150, R120

Suggested Citation

Brakman, Steven and van Marrewijk, Charles, Lumpy Countries, Urbanization, and Trade (December 14, 2011). CESifo Working Paper Series No. 3669. Available at SSRN: https://ssrn.com/abstract=1972153

Steven Brakman (Contact Author)

University of Groningen - Department of Economics ( email )

P.O. Box 800
9700 AV Groningen
Netherlands
+31 50 363 3746 (Phone)
+31 50 363 3730 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Charles Van Marrewijk

Utrecht University - School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, 3584 EC
Netherlands
*31-(0)30-2539810 (Phone)

HOME PAGE: http://www.charlesvanmarrewijk.nl

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